The Philippines’ gross international reserves (GIR) settled at $108.8 billion as of end-January. — REUTERS

THE Philippines’ gross international reserves (GIR) dipped in January as the National Government paid its foreign debt obligations and the central bank adjusted the valuation of its gold holdings.

Data from the Bangko Sentral ng Pilipinas (BSP) released on Monday showed the foreign exchange buffers decreased by 1.19% to $108.799 billion as of end-January, from the record $110.117 billion as of end-December.

This was still, however, 25% bigger than the $86.868-billion level a year ago and also exceeded the BSP’s $102-billion projection by end-2021.

“The month-on-month decrease in the GIR level reflected outflows mainly from the foreign currency withdrawals of the national government from its deposits in the BSP to pay its foreign currency debt obligations and revaluation adjustments from the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the central bank said in a statement.

Partially offsetting factors were inflows from the BSP’s foreign exchange operation and income from investments abroad.

Last year, the government borrowed P2.64 trillion, sourced from both local and foreign entities to support its pandemic response.

Ample foreign exchange buffers protect the country from market volatility and ensure the country is capable of paying its debts in the event of an economic downturn.

At the end-January level, the country’s dollar reserves is enough to cover around 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.

It is also equivalent to about 9.4 times the country’s short-term external debt based on original maturity and 5.1 times based on residual maturity.

During the month, the value of the gold reserves dropped 7.86% to $10.692 billion from $11.605 billion as of end-December. It was also 33% higher than the $8.015 billion a year ago.

Gains from investments abroad, which made up the bulk of the GIR, also dipped by 1.2% to $92.527 billion from $93.644 billion a month ago but increased by 24.4% from  the $74.364 billion a year earlier.

On the other hand, foreign currency deposits reached $3.532 billion, rising by 25% from the $2.821 billion in the prior month and by 30% from the $2.723-billion level as of end-January 2020.

Special drawing rights, or the amount the country can tap from the International Monetary Fund (IMF) was maintained at $1.232 billion for the second straight month.

Meanwhile, buffers kept with the IMF slightly rose 0.03% to $813.4 million from $813.1 million as of end-December and jumped 38% from the $587.9 million logged a year earlier.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said GIR may again reach a record high in the coming months as the pandemic drags on.

“Proceeds of foreign borrowings and other fund-raising activities amid near record low interest rates by the country’s biggest companies/conglomerates could add to the country’s GIR,” Mr. Ricafort said in a text message.  — Luz Wendy T. Noble

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