PH reserves stand at $81.5 billion in 2017

MANILA — The country’s gross international reserves (GIR) amounted to $81.5 billion in 2017, up from the previous year’s $80.3 billion, the Bangko Sentral ng Pilipinas (BSP) announced Friday.

The end-December 2017 GIR is also more than what the government projected of $80.7 billion for the last year.

BSP Governor Nestor A. Espenilla Jr., quoted in a statement, said the preliminary GIR number was higher because of inflows from the BSP’s foreign exchange operations, as well as net foreign currency deposits by the National Government (NG).

It is also a result of the “revaluation adjustments on the BSP’s gold holdings from the increase in the price of gold in the international market and income from the BSP’s investments abroad,” said Espenilla. “These were partially offset by payments made by the NG and the BSP for their maturing foreign exchange obligations.”

Espenilla said the GIR level is still sufficient to the country’s requirements. It is enough to cover up to 8.3 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.8 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity, he added.

Last year’s BSP-monitored foreign investments decreased to $65.76 billion while gold reserves of $8.34 billion were higher than what was reported at the end of 2016.

For 2018, the central bank has a more moderate forecast for GIR of $80 billion as they expect fund withdrawals or net outflows this year from the higher US interest rates.

These net outflows are from foreign portfolio investments “following possible series of rate hikes by the US Federal Reserve as well as the higher-than-expected prepayments done by both the public and private sectors,” said the BSP.
However the BSP also expects to see an increase in foreign direct investments (FDI) of $8.2 billion this year. They project a “small net inflow on account of increased FDIs as well as the anticipated lower net outflow in the foreign portfolio investments account.”

“The expected increase in FDIs to $8.2 billion in 2018 is in line with the sustained positive developments in the domestic economy, the expected improvement in global economic conditions relative to 2017, as well as the continued thrust toward fast-tracking and modernizing the country’s infrastructure,” said the BSP. “The anticipated lower net repayment by residents abroad reflects the lower level of foreign obligations that could be prepaid even with some penalties,” it added.