PH buffer fund drops to $106.76 B

Published May 8, 2022, 7:10 PM

by Lee C. Chipongian

The Philippines’ gross international reserves (GIR) decreased to $106.76 billion as of end April this year from $107.31 billion end March after the government paid off maturing foreign currency loans.

The current GIR level was also lower compared to same period in 2021 of $107.70 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

US dollar Reuters/File Photo (Manila Bulletin)

The BSP said that aside from the government’s foreign currency withdrawals to settle past debts, the GIR was lower because of other withdrawals to pay for expenditures.

In addition, the drop in global gold prices also affected the buffer stock. As of end-April, the BSP’s gold hoard amounted to $9.28 billion, down from $9.40 billion end-March and from $9.31 billion same period in 2021.

The BSP said the latest GIR remains an adequate level of external liquidity buffer which is equivalent to 9.4 months’ worth of imports of goods and payments of services and primary income. The current level is also seven times the country’s short-term external debt based on original maturity and 5.5 times based on residual maturity.

Besides gold reserves, the BSP’s reserve assets include foreign investments, foreign exchange, reserve position in the International Monetary Fund (IMF) and special drawing rights (SDR).

As of end April, BSP’s foreign investments totaled $90.70 billion, lower than end-March’s $91.46 billion and from $91.19 billion in 2021. The level of foreign exchange reserves, meantime, improved to $2.11 billion from $1.77 billion but much lower than $5.17 billion same period last year.

The IMF reserves in SDR remains at $3.89 billion. Last August 2021, the BSP received fresh SDR liquidity from the IMF amounting to $2.78 billion. The credit raised the SDR reserves to its current level. Before the fresh SDR allocation, the GIR has an existing SDR component of $1.22 billion which was first distributed to the Philippines in 2009 as funding support during the Global Financial Crisis.

The BSP’s Monetary Board last March 18, in reviewing the external accounts for this year, still expects GIR to stay at the $108-level by end-2022.

The highest GIR level on record is $110.12 billion which was the tally in December 2020.