Philippines’ foreign exchange reserves dropped to $103.528 billion as of end-May, the lowest since October 2020, after the government paid its maturing US dollar-denominated loans.
Based on Bangko Sentral ng Pilipinas (BSP) data, the latest gross international reserves (GIR) was $1.872 billion lower compared to April’s $105.4 billion. It was also down by $3.722 billion from same period last year of $107.25 billion.
The highest GIR level on record was $110.117 billion which was posted in December 2020. The GIR has been declining since January 2021 and the latest $103.528 billion reserves was the lowest in 19 months.
The current GIR is still preliminary data. The BSP will release the final GIR number by the third week of June.
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 its “various expenditures.”
“Further, the downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market contributed to the decline in the GIR,” said the BSP.
The end-May reserves in gold, foreign exchange and investments was still considered “more than adequate external liquidity buffer” by the central bank. It is equivalent to 9.1 months’ worth of imports of goods and payments of services and primary income. The benchmark is that three months is already adequate.
The GIR level is also 6.6 times the country’s short-term external debt based on original maturity and 4.5 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, said the BSP.
As of end-May, the BSP’s gold reserves amounted to $9.026 billion, it was lower compared to April’s $9.277 billion and from same time last year of $9.907 billion.
The BSP’s reserve assets also include foreign investments, foreign exchange, reserve position in the International Monetary Fund (IMF) and special drawing rights (SDR).
The central bank’s foreign investments totaled $87.874 billion during the period, down from $89.562 billion in April and from $92.835 billion in 2021.
Meantime, the level of foreign exchange reserves slightly increased to $2.074 billion from $2.012 billion in April and from $2.464 billion same period last year.
The IMF reserves in SDR was at $3.783 billion as of end-May, same in April. It was higher than May 2021 of $1.235 billion since it was only in August last year that the BSP received fresh SDR liquidity from the IMF amounting to $2.78 billion.
For this year, the BSP expects GIR will stabilize at the $108-level. At the current level though, the GIR is now lower than the country’s outstanding external debt debt of $106.43 billion as of end-2021.
The BSP said earlier that the GIR will still be supported by government foreign borrowings and potential increase in the volume of gold purchases this year.