By Luisa Maria Jacinta C. Jocson, A reporter
PHILIPPINES’ gross interNational reserves (GIR) dipped at the end of November as the government paid off another foreign currency debt, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Preliminary data showed that dollar reserves fell 2.4% to $108.5 billion at the end of November from $111.1 billion at the end of October.
Year-on-year, global reserves increased by 5.6% from $102.7 billion.
“The month-on-month decline in the GIR rate mainly reflected the withdrawal of foreign currency by the National Government (NG) from its deposits with the BSP to meet its foreign currency debt obligations and to meet its various expenses,” the central bank said.
The dollar reserve level is sufficient to cover approximately 4.3 times the country’s short-term external debt based on net maturity.
The GIR as of the end of November was also equal to 7.8 months worth of imports of goods and services and basic income.
“According to the agreement, the GIR is considered sufficient if it is able to finance at least three months of the purchase of goods in the country and the payment of services and basic income,” said the BSP.
Most foreign exchange reserves protect the economy from market volatility and ensure that a country can pay its debts in the event of an economic downturn.
Total foreign deposits fell 18% to $1.75 billion at the end of November from $2.14 billion the previous month. It fell as well 8.1% from $1.91 billion last year.
The central bank also attributed the decline in dollar reserves to “net foreign exchange activities and the decline in the BSP’s gold holdings due to the decline in gold prices in international markets.”
Gold reserves were estimated at $11.03 billion, down 2.9% from $11.35 billion at the end of October. However, it was up 1.9% from $10.82 billion in the same period last year.
In November, the price of gold fell for the first month since June due to the post-US election price sell-off driven by the victory of Donald J. Trump, Reuters reported.
Spot prices for the precious metal have fallen 5% since hitting a record high of $2,790.15 an ounce on Oct. 31 but are still up 28% so far this year.
BSP data showed foreign investment stood at $91.2 billion as of the end of November. This was 2% less than last month’s $93.1 billion but up 6.8% from $85.4 billion a year ago.
“Similarly, Net international reserves (NIR) decreased by $2.6 billion to $108.4 billion as of the end of November 2024 from the end of October 2024 to a level of $111 billion,” the BSP said.
The international reserve is the difference between the BSP’s or GIR’s reserve assets and its liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).
The country’s reserve position at the IMF decreased by 2.3% to $668.2 million from $683.9 million last month. Year over year, it was down 15.1% from $787.2 million.
Special drawing rights – the amount a country can borrow from the IMF – rose month-on-month to $3.81 billion from $3.8 billion.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said that the low level of GIR was caused by the payment of the net debt of the National Government of foreign debts and other obligations of the US.
He also cited the BSP’s net foreign exchange performance due to the dollar-peso exchange rate during the month.
In November, the peso fell to the P59-per-dollar level twice, hitting record lows on November 21 and 26.
“In the coming months, the country’s GIR can still be supported by the continued growth of the country’s inflows from overseas Filipino workers (OFW), BPO (business process) income, remittances, rapid return of tourism income,” said Mr. Ricafort.
Remittances usually increase in December as OFWs send more money to their families during the holiday season.
The latest data from the BSP showed remittances rose 3.3% to $3.01 billion in September. This brought the total down to $25.23 billion in the January-September period, up 3% year-on-year.
The central bank expects remittances to grow by 3% this year.
However, Mr. Ricafort also noted the government’s plan to reduce foreign borrowing to manage foreign currency risks.
The government’s borrowing program this year is set at a 75:25 mix, favoring domestic sources.
From 2025 to 2027, NG plans to obtain at least 80% of its borrowing program from domestic sources, and 20% from foreign lenders.
Finance Secretary Ralph G. Recto said they intend to reduce the portion of foreign loans in their borrowing program.
The BSP expects the country’s GIR to stabilize at $106 billion by the end of 2024.
Source link
