AS GLOBAL oil prices remain volatile, an economist is urging businesses and investors to look beyond fuel costs and focus instead on the Philippines’ foreign exchange reserves as the more critical indicator of economic stability.
Economist Ronilo Balbieran said the country’s vulnerability to external shocks is less about rising oil prices and more about its capacity to sustain imports through adequate dollar reserves.
“The key question is not how high oil prices go, but whether we have enough dollars to keep buying what we need,” he said, during SunStar Cebu’s Beyond the Headlines program on Wednesday, April 8, 2026.
Stronger buffer
than perceived
The Philippines currently holds between $100 billion and $110 billion in gross international reserves, equivalent to around seven to 10 months of import cover—well above the three-month benchmark widely considered the minimum safety threshold for economies.
This level of reserves provides a significant buffer against external shocks, allowing the country to continue financing imports such as fuel, raw materials, and capital goods even during periods of elevated global prices.
“As long as reserves remain strong, the economy can absorb shocks without slipping into contraction,” Balbieran said.
Historically, he noted, oil price spikes alone have not triggered negative economic growth in the Philippines, reinforcing the view that external liquidity—not commodity prices—is the more decisive factor.
Investor and currency
implications
For businesses and investors, the strength of dollar reserves has direct implications for peso stability, borrowing costs, and overall market confidence.
Adequate reserves help stabilize the peso by ensuring sufficient foreign currency supply, reducing the risk of sharp depreciation during global uncertainties. This, in turn, supports more predictable import costs and protects corporate margins.
Reserves also influence sovereign credit ratings, as stronger external buffers signal a country’s ability to meet its obligations, potentially keeping borrowing costs lower for both government and private sector.
“A country with strong reserves is seen as more resilient, which is critical for investor sentiment,” Balbieran said.
OFW remittances
as a key driver
The country’s robust reserve position is largely supported by steady inflows of foreign currency, particularly from overseas Filipino workers (OFWs), whose remittances continue to bolster external accounts.
These inflows provide a steady stream of dollars that help offset import payments and maintain liquidity in the financial system.
Risks remain
Despite the current buffer, economists caution that risks could emerge if reserves decline significantly or if external shocks persist over an extended period.
A sharp drop in reserves could limit the country’s ability to finance imports, disrupt production reliant on foreign inputs, and put pressure on the peso.
“The real vulnerability appears when reserves fall below safe levels,” Balbieran said, noting that such scenarios have historically coincided with broader economic stress.
Reframing the narrative
While fuel prices remain a visible and immediate concern for businesses and consumers, Balbieran said a broader perspective is needed to assess the country’s economic health.
“Oil prices affect costs in the short term,” Balbieran said. “But reserves determine whether the economy can withstand prolonged shocks.” / KOC