External Liquidity Buffer Stays Adequate Despite Monthly Drop
The country’s gross international reserves (GIR) stood at USD112.43 billion as of end-October 2024, slightly lower than the USD112.71 billion recorded at the end of September 2024, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP). Despite this modest month-on-month decrease, the country’s GIR level continues to offer a robust external liquidity cushion.
The current GIR represents a solid 8.1 months’ worth of imports of goods and payments for services and primary income, well above the benchmark of at least three months’ worth of import coverage that is typically considered sufficient for external stability. Additionally, the reserves are more than 4.5 times the country’s short-term external debt based on residual maturity, further reinforcing the country’s capacity to meet its foreign obligations in the near term.
The drop in reserves was mainly attributed to the National Government’s net foreign currency withdrawals from its accounts with the BSP, which were used to settle foreign currency-denominated debt and cover other fiscal expenditures. Similarly, net international reserves (NIR) declined by USD283 million to USD112.39 billion by the end of October from USD112.67 billion a month earlier.
The BSP’s reserves, which consist of foreign investments, gold, foreign exchange, the reserve position in the IMF, and special drawing rights, continue to support the country’s ability to weather external shocks and maintain economic stability. The GIR level, while slightly reduced, remains more than adequate to meet the country’s foreign debt obligations and sustain its external payment position in the short to medium term.
