The drop in Philippine gross international reserves (GIR) to a nine-month low, reported late last week by the central bank, also shows some positive signs about the country’s payment accounts, including the fact the reserves remain above the $100-billion mark for the 16th straight month, an analyst pointed out.
RCBC chief economist Michael Ricafort also cited the increase in BSP’s gold holdings to a four-year high, and that despite the lower 7.3 months of imports covered by the GIR, the reserves still stood more than twice the international standard of three to four months’ cover.
The central bank on Friday released the GIR data for end-January 2025, showing the level at $103 billion, down from $106.3 billion at end-December 2024. It said its foreign exchange interventions and the national government’s debt payments during the period pulled the country’s GIR level down to its lowest since April 2020. (See the sidebar story on BSP’s GIR report).
Ricafort said: “It (GIR) declined after some net payment of the national government’s foreign debt maturities and other obligations denominated in other foreign currencies… BSP’s net foreign exchange operations in view of the US dollar volatility were offset by the increase in gold holdings to new four-year highs, or since August 2020, after world gold prices again posted new record highs recently.”
Going forward, Ricafort sees a potential boost to the GIR from the recent $3.3 billion additional foreign commercial borrowings made by the national government in the latter part of January 2025, which “could be reflected in February 2025 [and] that could be added to the country’s balance of payments and GIR data.”
He stressed that the GIR, equivalent to 7.3 months’ worth of imports in recent months, is “the lowest in more than two years, or since 2022, and down from an immediate high of 8.1 months in September 2024, but still more than twice the international standard of three to four months and sustained well above the $100 billion mark.”
“This could strengthen the country’s external position, which is positive for sustaining the country’s favorable credit ratings of 1-3 notches above investment grade as consistently seen since the pandemic or over the past four years,” Ricafort added.
