Gov’t’s foreign loans boost Philippine dollar reserves

The Philippines’ gross international reserves (GIR) rose for the fourth month in a row, approaching the $100-billion mark at a preliminary $99.7 billion at the end January thanks to fresh foreign debt, according to the Bangko Sentral ng Pilipinas (BSP).

The GIR increased in January from $96.1 billion in December mainly due to “the national government posting net foreign currency deposits with the BSP, which include proceeds from its issuance of global bonds,” the central bank said.

In January, the government raised a total of $3 billion through the issuance of US-dollar denominated bonds, the proceeds from which are intended mainly for supporting the 2023 budget.

Also, the GIR increased again with the upward valuation adjustments in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market, and net income from the BSP’s investments abroad.

The stock of foreign reserves has been increasing month after month since September 2022, when it was pegged at $93 billion.

The last time the GIR was above $100 billion was in June 2022, when it was $100.8 billion.

Also, 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. It peaked at $110.12 billion in December 2020.

The BSP said preliminary data for January show that the GIR remained more than an adequate external liquidity buffer, equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.

Such reserves are considered adequate if they can finance at least three-months’ worth of the country’s import bill. Thus, the GIR as of January was more than twice the minimum adequate amount.

Further, the reserves were also about six times the country’s short-term external debt based on original maturity and four times based on residual maturity.

At the end of January, BSP’s earnings from its overseas investments were pegged at $83.25 billion, an increase of 2.3 percent from $81.37 billion a month earlier.

The central bank’s gold holdings were valued at $9.8 billion, an increase of 5.6 percent from $9.28 billion.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., noted that GIR decreased by 7.4 percent or about $8 billion from $107.69 billion in January 2022.

Ricafort said the year-on-year decline was correlated with the relatively weaker peso in the second semester of 2022, when the peso-US dollar exchange rate reached a new record of 59$1. INQ