Philippine forex reserves dipped to $93.95B in November

The Philippines’ foreign exchange reserves settled at $93.95 billion at the end of November, amid talks of using it as one of the sources of a seed fund for a planned P275-billion sovereign wealth fund.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday put the country’s gross international reserves (GIR) last month slightly lower than the end-October level of $94.03 billion.

“The month-on-month decrease in the GIR level reflected mainly the national government’s payments of its foreign currency debt obligations and the Bangko Sentral ng Pilipinas’ net foreign exchange operations,” the BSP said.

The GIR serve as a barometer of a country’s ability to meet its foreign exchange requirements for  payment of imported goods and settlement of debts to foreign creditors.

The central bank said that the latest GIR level represents a more than adequate external liquidity buffer, equivalent to 7.5 months’ worth of imports of goods and payments of services.

“Moreover, it is also about 6.9 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity,” the BSP added.

The BSP’s foreign exchange reserves is one of the sources being eyed for the Maharlika Wealth Fund—the country’s first ever if it comes to fruition —as proposed under House Bill No. 6398, or the Maharlika Investments Fund Act.

The proposed legislation was filed by House Speaker Martin Romualdez, Ilocos Norte Rep. Sandro Marcos, and four other lawmakers.

Aside from the BSP foreign exchange reserves, pension funds from the Government Service Insurance System and the Social Security System had also been eyed as sources of the initial fund but later dropped due to widespread opposition.

Meanwhile, the BSP  said that the country’s net international reserves (NIR) decreased marginally by $0.06 billion to $93.93 billion as of end-November, coming from the end-October level of $93.99 billion.

The NIR refers to the difference between GIR and reserve liabilities, which include short-term foreign debt and credit and loans from the International Monetary Fund.