Foreign reserves soar to all-time high in 2020

MANILA, Philippines — The country's foreign reserves hit an all-time high in 2020 on the back of ballooning external debt while domestic demand that used to drive dollar outflows remained weak amid a pandemic-induced recession.

Gross international reserves amounted to $109.8 billion as of end-December last year, up 4.77% on a month-on-month basis, the Bangko Sentral ng Pilipinas reported Friday.

The full-year tally was the highest on record for the Philippines and exceeded the BSP's forecast of $105 billion for 2020, data showed. 

Foreign reserves are composed of the most-traded currencies such as Japanese yen, US dollar and the euro, as well as gold, investments of the BSP overseas, and contributions to the International Monetary Fund.

Last year's hefty reserves, considered as buffer funds against external shocks, were enough to pay for 11.7 months' worth of the country's import needs, well above the global standard of 6 months cover.

The pile was also equivalent to 9.6 times the country’s short-term external debt based on original maturity and 5.5 times based on residual maturity.

According to the central bank, proceeds from the government's global bonds sale last month gave reserves a last-minute push. Buffer funds also got a lift from BSP's earnings from its foreign exchange operations as well as "revaluation gains" of its gold holdings.

However, these inflows were partly offset by the government's payments of its foreign debts.

Rising reserves, while giving Philippines economic protection, also signals that the broader economy would remain subdued for the time being as the health crisis drags on. — Ian Nicolas Cigaral