Based on preliminary data, the Philippines’ gross international reserves (GIR) level, grew by USD2.35 billion to USD93.29 billion as of end-May 2020 from the end-April 2020 level of USD90.94 billion.
The month-on-month increase in the GIR level reflected inflows primarily from the national government’s (NG) foreign currency deposits with the Bangko Sentral ng Pilipinas (BSP) of proceeds from its issuance of Republic of the Philippines (ROP) global bonds, and the BSP’s foreign exchange operations.
However, these inflows were partly offset by the foreign currency withdrawals made by the NG to pay its foreign currency debt obligations.
The hefty level of GIR represents an external liquidity buffer which can cushion the domestic economy against external shocks.
Specifically, this ensures availability of foreign exchange to meet the balance of payments that financing needs such as for payment of imports and debt service in extreme scenarios in which there are no export earnings or foreign loans.
As of end-May 2020, the current GIR level is equivalent to 8.4 months’ worth of imports of goods and payments of services and primary income. This can cover seven times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.
Net international reserves (NIR), which refer to the difference between the BSP’s GIR and total short-term liabilities, also increased by USD2.34 billion to USD93.27 billion as of end-May 2020 from the end-April 2020 level of USD90.93 billion.