Philippines: Foreign reserves hit $105.5 billion

Manila: The Bangko Sentral ng Pilipinas (BSP) said Friday preliminary data showed that the country's gross international reserves (GIR) rose to $105.5 billion as of end-May from $105.3 billion in April.

In a statement on Friday (June 6), the BSP said the month-on-month increase reflected mainly the upward valuation adjustments in the BSP gold holdings due to the increase in the price of gold in the international market.

It also got a boost from the net income from the BSP’s investments abroad, and the national government’s net foreign currency deposits with the BSP.

The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights.

The net international reserves, which refers to the difference between the central bank’s reserve assets (GIR) and reserve liabilities (short-term foreign debt and credit and loans from the IMF), also increased to $105.34 billion in May from $105.26 billion in April.

"This latest GIR level provides a robust external liquidity buffer, equivalent to 7.3 months' worth of imports of goods and payments of services and primary income," the BSP said.

It also covers about 3.7 times the country's short-term external debt based on residual maturity.

By convention, the GIR 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. 

The Philippines is expected to continue to post stable growth this year and in 2026 mainly driven by consumer spending, the Organization for Economic Cooperation and Development (OECD) said.

OECD head of Indonesia and Philippines desk Cyrille Schwellnus said OECD projects the Philippine economic growth to hit 5.6 percent this year and accelerate to 6 percent in 2026.

"So in the Philippines, we see the growth momentum to be broadly stable. Okay, so consumer spending as in Indonesia, as in the Southeast Asian countries also drives economic growth here. So it's the main driver of growth," Schwellnus said in a virtual briefing Wednesday.

Schwellnus said the continued growth in consumer spending is supported by a robust labour market as unemployment continues to settle at below 4% over the past months.

He said government spending also grew especially in the first quarter of this year, boosted by the midterm elections.

While exports managed to grow for the past months, Schwellnus said OECD projects growth to weaken due to escalating global trade tensions.

"Even so, we see, that the Philippines is less exposed to a slowing of global trade than many other Southeast Asian economies because its growth is mainly driven by domestic demand," he said.