Debt payment reduced Philippines' dollar reserves in September

MANILA, Philippines — The Philippines’ dollar reserves inched down in September after the government paid some of its maturing foreign debts.

What’s new

Gross international reserves amounted to $107.16 billion in September, 0.74% lower month-on-month, the Bangko Sentral ng Pilipinas reported on Wednesday.

Why this matters

Foreign reserves consist mostly of investments in gold and foreign currencies that could shield the economy during external shocks. As a lender of last resort, the central bank manages these buffers.

The BSP projects this year's reserves to hit a record-high $114 billion — equivalent to 11.1 months of import cover — compared to 2020’s level of $110.1 billion.

What the BSP says

In a statement, the central bank attributed the decline to "the debt service payment of the National Government’s (NG) foreign currency debt obligations and downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market."

Other figures

• The GIR level in July can cover 10.8 months’ worth of imports of goods and payments of services.
• The buffer funds also represents 7.6 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity.