THE Philippines needs to stock up on its dollar reserves to ensure that its Gross International Reserves (GIR) is “keeping up” with the country’s debts, according to a local economist.
In his presentation at the First Metro Investment Corp. (FMIC)-University of Asia and the Pacific (UA&P) economic briefing on Wednesday, UA&P economist Victor A. Abola said this will also cushion any external risks that could affect the country.
“Our GIR is not keeping up with the rise in debt. And that’s not something that is most welcome,” Abola said. “Secondly, we need to rebuild our gross dollar reserve because if we don’t do it, it keeps only [at] this level, which is not very ideal for the environment in which we have global markets that can move easily.”
Abola said the country’s external debt has reached $118.8 billion but the country’s GIR reached $101 billion as of the third quarter of 2023.
It was only in 2022 when the external debt zoomed past the country’s GIR. The external debt reached $111.3 billion while the GIR only reached $96 billion.
Based on the data, the GIR has kept up with the country’s external debt. Based on Abola’s data, in 2019, the country’s GIR reached $88 billion while the country’s external debt was at $83.6 billion.
Abola’s data showed the GIR reached $110 billion while external debt amounted to $98.5 billion in 2020. In 2022, the GIR was at $109 billion and the external debt was at $106.4 billion.
“The old standard of three months is…already passé. We need six to nine months of reserves. If we don’t do it, then the credit rating may be [affected],” Abola said.
GIR, BSP explained, is viewed to be adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income.
Earlier, the country’s dollar reserves reached over $100 billion by the end of 2023, according to the latest data from the BSP.
The BSP said the Philippines’s GIR reached $102.5 billion as of end-December 2023. This is higher by 6.56 percent than the $96.149 billion posted in the same period of 2022.
However, this was a decline of 0.26 percent from the $102.72 billion posted in November 2023. The slight decline was due to the government’s debt payments.
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