By Lee C. Chipongian
The country’s gross international reserves (GIR) reached $78.46 billion in 2018, which is less than the hoped-for original estimate of $80 billion, based on Bangko Sentral ng Pilipinas (BSP) data.
However, since the BSP revised the GIR forecast lower for 2018 to $76 billion last December 14, the end-December GIR level is above the new forecast.
For 2019, the BSP expects a GIR of $77 billion.
The end-December GIR of $78.46 billion is lower compared to 2017’s $81.57 billion.
In a statement, BSP Governor-in-Charge Diwa C. Guinigundo said the current reserves level is also more than November 2018’s $75.68 billion “due mainly to inflows arising from the BSP’s foreign exchange operations, net foreign currency deposits by the National Government (NG) and revaluation gains from BSP’s gold holdings resulting from the increase in the price of gold in the international market.”
“However, the increase in reserves was partially tempered by payments made by the NG for servicing its foreign exchange obligations,” the statement attributed to Guinigundo said.
He said the GIR is considered still “ample external liquidity buffer”. It is equivalent to 6.9 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 four times based on residual maturity.
As of end-December, BSP’s managed foreign investments – part of GIR – amounted to $66.09 billion, higher than end-2017’s $65.81 billion.
Gold reserves, in the meantime, reached $8.15 billion end-year, lower compared to same time in 2017 of $8.34 billion.
The BSP revised all external sector estimates for 2018 and 2019 last month.
The country’s balance of payments (BOP) deficit, for example, is expected to be higher at $5.5 billion for 2018 versus previous forecast of only $1.5 billion deficit. For 2019, the BSP forecasts a BOP deficit of $3.5 billion.
One of the BOP components, the current account, is expected to incur a bigger shortfall of $6.4 billion in 2018, twice that of the projection of $3.1 billion made earlier.
The BSP in revising external sector targets have taken into account the impact of US-China trade war on the global economy, as well as the lowering of the country’s GDP growth targets to 6.5-6.9 percent from the previous seven to eight percent.