- Category: Top News
07 Jul 2014
- Written by Bianca Cuaresma
The country’s buffer against financial stresses remained broadly steady at the end of the first half, as payments for maturing foreign-exchange obligations of the national government partially offset inflows during the month.
In a report on Monday, the Bangko Sentral ng Pilipinas (BSP) said the Philippines’s gross international reserves (GIR) hit $80.7 billion in June.
This represented a $500-million increase from revised GIR data in May of only $80.2 billion. Compared to its year-ago level, however, the first-half GIR was some $527 billion lower than the $81.26 billion seen in the same period last year.
June’s GIR data also show a steady climb from only $79.645 billion in March to $79.844 billion in April and $80.242 billion in May.
“The increase in reserves was due mainly to the revaluation adjustments on the BSP’s gold holdings, net foreign currency deposits by the treasurer of the Philippines and income from the BSP’s investments abroad. These inflows were partially offset by payments for maturing foreign- exchange obligations of the national government,” the central bank said.
The central bank manages the GIR and uses them to underwrite the country’s foreign-currency obligations. It also serves as a cushion against unexpected imbalances that stem from external developments. Gold reserves, special drawing rights, foreign investments and foreign-exchange reserves comprise the country’s GIR.
An ample level of reserves indicates a country’s capacity to repay its obligations and has enough buffer against risks to global imbalances.
Data from the central bank show that its gold holdings hit $8.285 billion in June, up from the $7.79 billion the previous month. Foreign investments, meanwhile, hit $69.849 billion. This was slightly higher than the $69.635 billion seen in May.
The BSP said the GIR should be sufficient to finance 11 months worth of imports of goods and payments of services and income. It is also equivalent to 7.7 times the country’s short-term external debt based on original maturity or 5.7 times based on residual maturity.
Net international reserves – or the difference between the GIR and total short-term liabilities – also increased during the period.
For now, the government projects the GIR reaching $88 billion by the end of the year subject to revision at some point.