Slight decrease in BSP dollar reserve in January linked to external debt payments
MANILA, Philippines — The amount of dollars held in reserve by the central bank declined slightly in the first month of 2021, as the national government withdrew foreign currency to pay its maturing debts, said the Bangko Sentral ng Pilipinas (BSP).
In a statement, the PASB said the country’s gross international reserves level, based on initial data, stood at $ 108.8 billion at the end of January 2021, from a historic high of $ 110.12 billion. end of December 2020.
The figures, according to the BSP, “reflected the outflow of mainly foreign currency withdrawals by the national government from its deposits in the BSP to pay off its foreign currency debt obligations.”
He added that the drop was also partly due to the revaluation of BSP’s gold holdings following a drop in gold prices in the international market.
“These outflows were, however, partly offset by inflows from the BSP’s foreign exchange operations and income from its investments abroad,” the central bank said.
Despite the decline, the BSP said the latest dollar reserve level represents a cushion of “adequate” external liquidity, which can help protect the domestic economy from external shocks.
This level is equivalent to about 11.6 months of imports of goods and payments for services and primary income. It is also about 9.4 times the country’s short-term external debt on the basis of original maturity and 5.1 times on the basis of residual maturity.
By convention, dollar reserves are considered sufficient if they can finance at least three months of imports of goods and payments for services and primary income from the country.
Short-term debt based on residual maturity refers to the stock of external debt with an original maturity of less than or equal to one year, plus principal repayments on medium and long-term public and private sector loans from the public and private sectors. expiring within the next 12 months.
The level of GIR, from a given period, is considered adequate if it covers at least 100% the payment of the country’s external commitments, public and private, falling due within the immediate twelve months.
Net international reserves – which refers to the difference between gross BSP reserves and total current liabilities – decreased from $ 1.33 billion to $ 108.79 billion at end-January 2021 from the level at the end of December 2020 of 110.12 billion dollars.
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