The Philippines’ stock of foreign currency reserves settled at a total of $108.89 billion at end-2021, lower by 1 percent from $110.12 billion at end-2020, but still “more than adequate” to cover short-term liabilities, according to the Bangko Sentral ng Pilipinas (BSP).
Also, the BSP said preliminary show that its gross international reserves (GIR) increased by $1.17 billion from $107.72 billion at the end of November 2021.
The regulator said the month-on-month increase in the GIR level reflected mainly the national government’s net foreign currency deposits with the BSP, and upward adjustment in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market.
The BSP’s GIR consists of foreign investments, gold, foreign exchange (forex), reserve position in the International Monetary Fund and special drawing rights. This is considered adequate if it can cover at least three-months’ worth of the country’s foreign liabilities, both public and private.
“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 10.3 months’ worth of imports of goods and payments of services and primary income,” the BSP said.
“Moreover, it (GIR) is also about 8.8 times the country’s short-term external debt based on original maturity and 5.9 times based on residual maturity,” the BSP added.
In a research note, ING Bank Philippines senior economist Nicholas Mapa observed that the GIR has remained at “relatively healthy levels both from a current and historical perspective” despite the challenging year and some expectations of a stark drawdown of the country’s reserves.