By Luisa Maria Jacinta C. Jocson, Reporter
THE PHILIPPINES’ gross international reserves (GIR) experienced a decline at the conclusion of November as the administration addressed portions of its foreign currency-linked liabilities, according to data released by the Bangko Sentral ng Pilipinas (BSP).
Initial figures indicated that dollar reserves fell by 2.4% to $108.5 billion at the close of November from $111.1 billion at the close of October.
Compared to the previous year, gross international reserves increased by 5.6% from $102.7 billion.
“The month-over-month reduction in the GIR level was primarily due to the National Government’s (NG) net foreign currency withdrawals from its accounts with the BSP to fulfill its foreign currency debt commitments and finance various expenditures,” the central bank remarked.
The dollar reserves were adequate to cover approximately 4.3 times the nation’s short-term external liabilities based on residual maturity.
As of the end of November, the GIR also represented 7.8 months’ worth of imports of goods as well as payments for services and primary income.
“Typically, GIR is regarded as sufficient if it can finance at least three months’ worth of the nation’s imports of goods and payments for services and primary income,” stated the BSP.
Sufficient foreign exchange reserves shield an economy from market fluctuations and guarantee that a nation can meet its obligations in times of economic distress.
Net foreign currency deposits plunged by 18% to $1.75 billion at the end of November compared to $2.14 billion a month prior. It also represented an 8.1% decrease from $1.91 billion the previous year.
The central bank further attributed the drop in dollar reserves to its “net foreign exchange operations and downward valuation adjustments in the BSP’s gold assets due to a decrease in the international gold price.”
Gold reserves were valued at $11.03 billion, declining by 2.9% from $11.35 billion at the end of October. Nonetheless, it rose by 1.9% from $10.82 billion in the same timeframe last year.
November marked the first monthly decline in gold prices since June due to a post-US election sell-off following Donald J. Trump’s victory, as reported by Reuters.
Spot prices for the precious metal have decreased by 5% since reaching a record high of $2,790.15 an ounce on October 31, yet they remain 28% higher year-to-date.
BSP data revealed that foreign investments totaled $91.2 billion as of the end of November, a 2% decrease from $93.1 billion the prior month but an increase of 6.8% from $85.4 billion last year.
“Likewise, the net international reserves (NIR) fell by $2.6 billion to $108.4 billion as of end-November 2024 from the end-October 2024 figure of $111 billion,” stated the BSP.
Net international reserves reflect the difference between the BSP’s reserve assets or GIR and reserve liabilities, including short-term foreign debts and credit lines from the International Monetary Fund (IMF).
The nation’s reserve position with the IMF declined by 2.3% to $668.2 million from $683.9 million the previous month. Year-over-year, it decreased by 15.1% from $787.2 million.
Special drawing rights—the amount that the country can avail from the IMF—increased slightly month-on-month to $3.81 billion from $3.8 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort indicated that the lower GIR level resulted from the net settlement of the National Government’s foreign debt maturities and other obligations in US dollars.
He also highlighted the BSP’s net foreign exchange operations in light of the US dollar-peso fluctuations during the month.
In November, the peso fell to the P59-per-dollar level twice, reaching a record low on November 21 and 26.
“In the upcoming months, the country’s GIR might still benefit from the sustained growth in structural inflows such as overseas Filipino worker (OFW) remittances, business process outsourcing (BPO) revenues, exports, and a relatively swift recovery in foreign tourism earnings,” Mr. Ricafort noted.
Remittances usually see an uptick in December as OFWs send increased amounts for their families during the holiday season.
Recent data from the BSP showed that cash remittances surged by 3.3% to $3.01 billion in September. This brought the total to $25.23 billion in the January-September period, marking a 3% increase year-over-year.
The central bank anticipates a 3% growth in remittances for this year.
However, Mr. Ricafort also mentioned the government’s strategy to limit foreign borrowing to mitigate foreign exchange risks.
This year’s borrowing plan is structured at a 75:25 ratio, favoring domestic sources.
For the years 2025 to 2027, the NG aims to source at least 80% of its borrowing needs from domestic avenues, with 20% from foreign creditors.
Finance Secretary Ralph G. Recto has indicated their goal is to decrease the proportion of external borrowings within its financing approach.
The BSP projects the country’s GIR to stabilize at $106 billion by the end of 2024.
