MANILA, Philippines — The country’s gross international reserves (GIR) is expected to hit a record high of $114 billion this year and $117 billion next year, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
The GIR, the sum of all foreign exchange flowing into the country that serves as buffer to ensure it would not run out of foreign exchange in case of external shocks, stood at $109.08 billion as of end-February.
The country’s forex buffer hit an all-time high of $110.1 billion in end-2020.
Diokno said the country’s balance of payments (BOP) position may reach $6.2 billion or 1.6 percent of gross domestic product this year before stabilizing at $3.8 billion or 0.9 percent of GDP in 2022.
The BOP is the difference in total values between payments into and out of the country over a period. A surplus means more foreign exchange flowed into the country from exports, remittances from overseas Filipinos, business process outsourcing earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.
Diokno said the BSP has maintained its four percent growth forecast for overseas Filipino workers’ remittances in 2021 and 2022, while tourism receipts are expected to rise by 15 percent this year and 20 percent next year.
Based on the revised forecasts, the BSP now expects foreign direct investments inflow to reach $7.8 billion this year and $8.8 billion next year. The net FDI inflow slumped by nearly 25 percent to a five-year low of $6.54 billion last year from $8.67 billion in 2019 as the country struggled to contain the pandemic.
It also sees foreign portfolio investments or hot money inflow to reach $5.7 billion this year and $7.4 billion next year. The Philippines recorded a net outflow of speculative funds at $4.24 billion last year, more than double the $1.9 billion recorded in 2019 as investors liquidated their portfolios.
Diokno said the BSP is also now looking at a wider current account surplus of $9.1 billion or 2.3 percent of GDP this year and $5.2 billion or 1.2 percent of GDP next year.
The current account consists of transactions in goods, services, primary income and secondary income. This account measures the net transfer of real resources between the domestic economy and the rest of the world.