Philippines closes 2023 with $102.5 billion foreign reserves

The Philippines ended 2023 with over a hundred billion dollars worth of foreign currency reserves, enough to cover more than a half year’s imports and foreign obligations.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s gross international reserves (GIR) —a measure of the country’s ability to settle import payments and service foreign debt— as of end-December 2023 stood at $102.5 billion, slightly lower than the end-November 2023 level of $102.7 billion.

The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights.

“The month-on-month decrease in the GIR level reflected mainly by the national government’s payments of its foreign currency debt obligations,” the central bank said.

Likewise, Rizal Commercial Banking Corp. Chief Economist Michael Ricafort said the month-on-month decline in the GIR level as of the end of 2023 was due to “payment of the national government's foreign debt/obligations as they fell due towards the end of the accounting year.”

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, exports (though offset by imports), relatively fast recovery in foreign tourism revenues, as well as continued foreign investment/FDI inflows,” Ricafort said.

The end-December GIR level, despite the slight month-on-month decline, was still “a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.”

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 —earnings of overseas Filipino workers as well as the profit of Philippine investments abroad.

The end-2023 GIR level was also about 6.0 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.

Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

“The level of GIR, as of a particular period, is considered adequate, if it provides at least 100% cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate twelve-month period,” the BSP said.

Similarly, net international reserves —the difference between the BSP’s reserve assets (GIR) and reserve liabilities (short-term foreign debt, credit, and loans from the International Monetary Fund)— increased by $500 million to $102.4 billion as of end-December 2023 from the end-November 2023 level of $101.9 billion. — DVM, GMA Integrated News