Coming soon: PH dollar reserves below $100B | Inquirer Business
Due to debt repayments, wider trade gap

Coming soon: PH dollar reserves below $100B

Gross international reserves (GIR) in the Philippines is expected to dip below $100 billion soon and further down over the next three quarters as payment of US dollar-denominated government debt, lower prices of gold and a widening trade deficit eat away at the country’s buffer stock to cover foreign bills and liabilities.

Consisting of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund, and special drawing rights, the GIR has been declining month after month over the past five months.


These reserves were pegged at $107.8 billion at the end of February and settled at $100.9 billion at the end of June.

The GIR first breached the $100-billion mark at $100.4 billion in September 2020 as the global fallout of the COVID-19 pandemic slashed the Philippines’ import bill.


This metric peaked at $110.12 billion in December 2020, when it was enough to cover 11.7 months’ worth of imports of goods and payments of services and primary income. The GIR is considered to be adequate if it can finance at least three-months’ worth of such items.

Back then, the GIR was also about 9.6 times the country’s short-term external debt based on original maturity and 5.5 times based on residual maturity.

Economists at the Bank of the Philippine Islands predict that reserves will be falling continuously over the next nine months as prices of imported goods and inputs remain high amid the lingering disruptions from the Russia-Ukraine war.

Based on BPI’s projection, the GIR could sink bank to double digits as early as the end of July and subside and approach the $80-billion mark by April 2023 and onward.

“This means the country’s import cover will be halved by about 12 months [at the GIR’s peak] to six months by April, and even five months [by a more adverse reckoning],” BPI lead economist Emilio Neri Jr. said in a briefing.

Neri clarified that the forecast is based on the assumption that prices of crude oil— which represents a big chunk of the Philippines’ import bill —stays above $100 per barrel. INQ

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