The country’s gross international reserves (GIR) stood at $80.785 billion in August, still down by $2.106 billion from the year-earlier level despite an increase of $141 million from July on the back of the Treasury’s net foreign currency deposits and income from the central bank’s investments abroad.
The Bangko Sentral ng Pilipinas (BSP) said in its release of the data on Friday that the current level of reserves provides a buffer of 11 months’ worth of payments for the economy.
The level shows an improvement from the revised total of $80.644 billion in July and a decline from the August 2013 level of $82.891 billion. The July GIR figure had previously been reported by the central bank at $81 billion.
GIR refers to foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances. It consists of holdings of gold, special drawing rights, foreign investments, and foreign exchange. Higher reserves provide monetary authorities with some flexibility in managing both the exchange rate of the peso and domestic inflation.
The central bank explained that the gross month-on-month increase in reserves was partially offset by the cost of the government’s maturing foreign exchange obligations.
The BSP had revised downward its earlier projection for full-year GIR to $85.3 billion from $88 billion after it cut its balance of payments (BOP) projection for this year to just $1 billion.
“The GIR remains ample as it can cover 11 months’ worth of imports of goods and payments of services and income. It is also equivalent to 7.9 times the country’s short-term external debt based on original maturity and 5.7 times based on residual maturity,” the BSP stated.
Possible sign of import contraction
“The current GIR level means that that the balance of payments was in surplus. I guess we remain in surplus,” Emilio Neri Jr., economist at the Bank of the Philippine Islands said.
However, Neri noted that on the downside, a surplus in the payments balance could signify a contraction in imports during the month.
The “BOP surplus could mean that part of it is a compression in imports because of the port congestion. It could signal that we imported even less in August,” he said.