Economists envision another record TIF for PH
MANILA – Another record foreign reserve is expected for the Philippines in the coming months as structural inflows remain resilient and quarantine measures support improving trade deficit.
Preliminary data released on Friday by the Bangko Sentral ng Pilipinas (BSP) showed that gross international reserves (GIR) reached USD 107.25 billion at the end of April 2021, up from USD 04.48 billion the previous month and were approaching the record high from 110 USD. 1 billion last December.
“Thus, a new record TIB (is) possible in the coming months in a context of reduced trade deficit / net imports; continuous influx of OFW (Filipino workers abroad) remittances, BPO (business process outsourcing) income, FDI (foreign direct investment), ”said Rizal Commercial’s chief economist Banking Corporation (RCBC), Michael Ricafort, in a report,
BSP said the latest level of GIR “represents a more than adequate external liquidity cushion, which can help cushion the national economy against external shocks.”
He said this level is equivalent to 12.3 months of imports of goods and payments for services and primary income and is about 7.5 times the country’s short-term external debt based on original maturity.
He attributed the rise in the RIF to the proceeds of issuance of US dollar-denominated global bonds and national government samurai bonds that were deposited with the central bank.
Besides these factors, said Ricafort, “the reduction in the trade deficit / net imports, largely due to the stricter quarantine standards in NCR Plus since the end of March 2021, would also have added to the balance of payments (balance of payments). payments) and to the country’s GIR. “
He said the current level of the country’s foreign exchange reserves is much higher than the international 3-4 month minimum threshold and “would thus help strengthen the country’s external position and, in turn, fundamentally support / promote ratings. credit of the country ”.
He added that “the near-record levels of the BIR would fundamentally provide a greater cushion / shock absorber / support to the peso exchange rate, thus leading to the stronger peso exchange rate, recently among the strongest in over 4.5. years or since September 2016, gives at least more protection to the peso from speculative attacks, in the future. “