Dollars from bond sale, BSP's investments lift reserves in March

MANILA, Philippines — The Philippines’ buffer funds went up in March due to proceeds from the government’s recent global bonds offering and earnings of the Bangko Sentral ng Pilipinas’ from its investments abroad.

What’s new

The Philippines’ gross international reserves amounted to $108.54 billion in March, up from $107.8 billion in February, the BSP reported Friday.

The central bank attributed the increase to the Duterte administration’s deposits with the BSP, which included cash it raised during its last sale of US dollar-denominated bonds.

READ: Government raises $2.25-B new debt via triple-tranche bond offer

There were also some inflows from the BSP’s offshore investments.

Why this matters

Foreign reserves are assets held mostly as investments in foreign-issued securities, gold as well as foreign currencies like dollar and euro. Being the lender of last resort, the BSP manages reserves as a stand-by fund to help the economy stay afloat in times of external shocks.

The BSP forecasts the country’s GIR to hit $108.0 billion by the end of 2022, which would be lower than $108.8 billion recorded in 2021 as economic reopening stoke imports, which could drive dollar outflows.

What an analyst says

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. said the March reserves would have been higher if it hadn’t been for “some foreign debt payments and some decline in foreign investment income amid increased volatility in the global financial markets largely brought about by Russia's invasion…”

“For the coming months, the country’s GIR could still post new record highs amid the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, foreign tourism revenues (resumed since February 10, 2022), as well as foreign investment/FDI inflows,” Ricafort said in an e-mailed commentary.

Other figures

• The buffer funds as of March were enough to pay for the country's import needs for 9.6 months — well above the global standard of at least six months cover.
• Moreover, it is also about 7.2 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.

— Ian Nicolas Cigaral