MANILA — The Philippines’ gross international reserves stood at US$103.4 billion at the end of July, providing the country with a substantial buffer against external economic shocks and enough foreign currency to cover its import and debt-service requirements, the Bangko Sentral ng Pilipinas said.
The preliminary reserve level was equivalent to 6.7 months’ worth of imports of goods and payments of services and primary income, the central bank said in a report released Sunday.
It also represented about 3.6 times the country’s short-term external debt based on residual maturity, indicating the Philippines remains in a strong position to meet near-term external obligations.
The July reserve level declined from the previous month, with the BSP attributing the movement mainly to its net foreign exchange operations and the national government’s use of foreign currency deposits held with the central bank.
The government drew down its foreign currency deposits with the BSP to service external debt obligations. It also made net foreign currency withdrawals from its deposits with the central bank.
These outflows were partly offset by gains in the value of the BSP’s gold holdings following an increase in international gold prices.
The central bank also recorded net income from its investments abroad, helping cushion the decline in the reserve position.
The GIR represents the BSP’s foreign assets that are readily available to meet the country’s external financial requirements. These include foreign securities, currency and deposits, the country’s reserve position in the International Monetary Fund, gold, special drawing rights and other reserve assets.
The BSP said the reserve buffer remains adequate to support the country’s external liquidity needs, including payments for imports and services and the servicing of foreign obligations.
The level of reserves is closely watched as an indicator of the country’s ability to withstand external pressures, including sudden movements in global financial markets, capital outflows and other economic shocks.
The 6.7-month import cover exceeds the commonly monitored three-month benchmark, underscoring the country’s capacity to finance external transactions even amid potential disruptions in foreign exchange markets.
Meanwhile, the reserve coverage of 3.6 times short-term external debt based on residual maturity provides an additional measure of the Philippines’ ability to meet debt obligations falling due within the next 12 months.
The BSP defines short-term external debt based on residual maturity as the outstanding external debt with an original maturity of one year or less, plus principal payments due within the next 12 months on medium- and long-term loans of both the public and private sectors.
The BSP’s July GIR figure is preliminary and may be subject to subsequent revisions.
The central bank publishes the GIR as part of its regular monitoring of the country’s external position and foreign exchange liquidity.
For more information, the BSP refers to items 8 to 11 of its Balance of Payments and International Investment Position frequently asked questions. PR
