The Bangko Sentral ng Pilipinas (BSP) reported making a killing with its investments abroad, helping keep the Philippines’ dollar reserves above the $100-billion mark for eleven straight months and beyond the projection of the central bank for the entire year.
Data released by the BSP showed the country’s gross international reserves (GIR) amounted to $106.9 billion in August, up from $106.7 billion that was recorded in July.
The BSP said the higher GIR last month was mainly due to net income from its investments abroad. Since May, the country’s dollar reserves have been running above the $104-billion projection of the central bank for 2024. Such buffer funds reached $103.8 billion last year.
Buffer
Similarly, data showed the Philippines’ net international reserves—or the difference between the GIR and liabilities like short-term foreign debt and loans from the International Monetary Fund (IMF)—increased by $200 million month-on-month to $106.9 billion as of August.
As the term connotes, the GIR serves as the country’s buffer against external shocks. The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the IMF and special drawing rights.
By convention, GIR is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.
The reserves are also considered adequate if they provide at least 100 percent cover for the payment of the country’s foreign liabilities—both from the public and private sectors—falling due within the immediate 12-month period.
Figures from the central bank showed the latest GIR level represented a more than adequate external liquidity buffer equivalent to 7.9 months’ worth of imports of goods and payments of services and primary income.
At the same time, the amount was about 6.1 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.