MANILA, Philippines — The Philippines’ foreign reserves rose in August, boosted by new Special Drawing Rights (SDRs) from the International Monetary Fund.
What’s new
Gross international reserves settled at $108.05 billion as of end-August, up 0.84% month-on-month, the Bangko Sentral ng Pilipinas reported on Monday.
Why this matters
Foreign reserves are investments in gold and foreign currencies, which could protect the economy from external shocks. These assets are managed by the central bank as the lender of last resort.
The BSP expects the GIR to hit $115 billion this year, higher than the record $110 billion in 2020, despite the expected return of local demand that drives dollar outflows as the economy emerges from coronavirus lockdowns.
What the BSP says
The increase in the reserves last month was “due mainly to the additional allocation of Special Drawing Rights to the Philippines given the IMF’s efforts to increase global liquidity amid the pandemic," the BSP said. The new SDRs totaled $650 billion for all IMF members, with the Philippines receiving $2.8 billion.
The SDR serves as the unit of account of the IMF and other international organizations.
The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.
“This was partly offset, however, by the National Government’s foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures, and the BSP’s net foreign exchange operations,” the BSP added.
Other figures
- The latest GIR can finance 12.3 months’ worth of import of shipments of goods and services.
- It represented about 7.8 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.