By Luisa Maria Jacinta C. Jocson, Reporter
THE PHILIPPINES’ gross international reserves (GIR) dipped at the end of November as the government settled some of its foreign currency-denominated debt, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Preliminary data showed dollar reserves slipped by 2.4% to $108.5 billion at the end of November from $111.1 billion at the end of October.
Year on year, gross international reserves rose by 5.6% from $102.7 billion.
“The month-on-month decrease in the GIR level reflected mainly the National Government’s (NG) net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the central bank said.
The level of dollar reserves was enough to cover about 4.3 times the country’s short-term external debt based on residual maturity.
The GIR as of end-November was also equivalent to 7.8 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,” the BSP said.
Ample foreign exchange buffers protect an economy from market volatility and ensure that a country can pay its debts in the event of an economic downturn.
Net foreign currency deposits dropped by 18% to $1.75 billion at end-November from $2.14 billion a month ago. It likewise fell by 8.1% from $1.91 billion a year ago.
The central bank also attributed the decline in dollar reserves to its “net foreign exchange operations and downward valuation adjustments in the BSP’s gold holdings due to the decrease in the price of gold in the international market.”
Reserves in the form of gold were valued at $11.03 billion, down by 2.9% from $11.35 billion at end-October. However, it was up by 1.9% from $10.82 billion in the same period a year earlier.
November saw gold’s first monthly price drop since June due to a post-US election sell-off driven by Donald J. Trump’s win, Reuters reported.
Spot prices for the precious metal are down 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 investments stood at $91.2 billion as of end-November. This was 2% lower than $93.1 billion in the previous month but higher by 6.8% from $85.4 billion last year.
“Similarly, the net international reserves (NIR) declined by $2.6 billion to $108.4 billion as of end-November 2024 from the end-October 2024 level of $111 billion,” the BSP said.
Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).
The country’s reserve position in the IMF dipped by 2.3% to $668.2 million from $683.9 million a month earlier. Year on year, it slumped by 15.1% from $787.2 million.
Special drawing rights — the amount the country can tap from the IMF — inched up month on month to $3.81 billion from $3.8 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower GIR level was due to the net payment of the National Government’s foreign debt maturities and other US-denominated obligations.
He also cited the BSP’s net foreign exchange operations in view of the US dollar-peso volatility during the month.
In November, the peso fell to the P59-per-dollar level twice, hitting the record low on Nov. 21 and 26.
“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from overseas Filipino worker (OFW) remittances, BPO (business process outsourcing) revenues, exports, relatively fast recovery in foreign tourism revenues,” Mr. Ricafort said.
Remittances typically see a boost in December as OFWs send more money for their families amid the holiday season.
Latest data from the BSP showed cash remittances rose by 3.3% to $3.01 billion in September. This brought the total to $25.23 billion in the January-September period, up by 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 borrowings to manage foreign exchange risks.
The government’s borrowing plan this year is set at a 75:25 mix, in favor of domestic sources.
For 2025 to 2027, the NG plans to source at least 80% of its borrowing program from domestic sources, and 20% from foreign lenders.
Finance Secretary Ralph G. Recto has said they are aiming to reduce the share of external borrowings in its borrowing program.
The BSP expects the country’s GIR to settle at $106 billion by end-2024.