The Philippines’ gross international reserves (GIR) fell to USD103.3 billion at the end of July from USD104.7 billion a month earlier, while the country posted a USD1.5-billion balance of payments (BOP) deficit, reflecting continued pressure from external transactions.
The Bangko Sentral ng Pilipinas (BSP) said the reserves remained sufficient to meet the country’s import requirements, service external debt obligations, and provide a buffer against external economic shocks.
The end-July GIR was equivalent to 6.7 months of imports of goods and payments of services and primary income. It could also cover about 3.7 times the country’s short-term external debt based on residual maturity.
The USD1.4-billion monthly decline in reserves was mainly driven by the BSP’s net foreign exchange operations, National Government drawdowns on its foreign currency deposits with the central bank for external debt payments, valuation losses on foreign currency-denominated reserve assets, and the government’s net foreign currency withdrawals.
These were partly offset by income from the BSP’s overseas investments and valuation gains on its gold holdings as international gold prices rose.
Meanwhile, the country’s BOP deficit reached USD1.5 billion in July, bringing the cumulative shortfall for January to July to USD5.3 billion.
While the year-to-date deficit remains substantial, it was narrower than the USD5.8-billion shortfall recorded during the same period last year.
The BSP said the January-July BOP position continued to reflect the country’s trade-in-goods deficit and net outflows from foreign portfolio investments.
These pressures were partly cushioned by sustained net inflows from overseas Filipino personal remittances, National Government foreign borrowings, trade in services, and foreign direct investments.
The figures point to a continuing external financing gap, but the still-sizeable reserve buffer gives the Philippines room to absorb near-term pressures.
The reserve position also provides the central bank with some cushion against currency volatility and external shocks as global financial and trade conditions remain uncertain.
