Philippines: $105.2-billion gross international reserves in May is ‘healthy’ — central bank
While reserves remain strong, the Balance of Payments recorded $298m deficit for May 2025
Manila: The Bangko Sentral ng Pilipinas (BSP) reported that the country's Gross International Reserves (GIR) stood at $105.2 billion in May 2025, reflecting a slight decline from $105.3 billion in April.
Despite the dip, the central bank emphasized that the level remains robust and "healthy."
“Despite the modest decline, the GIR level remains a strong external liquidity buffer, sufficient to cover 7.1 months’ worth of imports of goods and payments of services and primary income,” the BSP said in a statement.
It also noted that current reserves are adequate to cover approximately 3.3 times the country's short-term external debt based on residual maturity.
The May GIR level, however, was slightly higher than in January 2025, when it stood at $103.0 billion, the lowest level since April 2024.
Back then, BSP attributed the decrease to the central bank's selling foreign exchange and using deposits to pay off foreign debt obligations.
What are gross international reserves?
GIR are foreign assets held by a central bank, intended to ensure macroeconomic and financial stability, especially during times of external shocks or currency volatility.
Components of GIR:
Foreign exchange reserves: Holdings in foreign currencies like USD, EUR, or JPY—usually in treasury bills, deposits, or bonds.
Gold reserves: Physical gold held as a store of value.
Special Drawing Rights (SDRs): Reserve assets allocated by the International Monetary Fund (IMF), convertible to usable currencies.
IMF Reserve Position: The country’s quota-based drawing rights from the IMF.
Other Reserve Assets: Financial instruments or derivatives convertible to foreign exchange.
Why GIR matters
A high GIR level signals strong economic fundamentals, including:
Currency ctability: Helps the central bank stabilize the peso in the foreign exchange market.
Investor confidence: Reduces perceived default risks, boosting creditworthiness.
Debt servicing capacity: Indicates ability to meet external obligations.
Import cover: At 7.1 months, the Philippines exceeds the IMF’s safe threshold of 3 months.
Balance of payments update
While reserves remain strong, the Balance of Payments (BOP) for May 2025 recorded a deficit of $298 million, largely due to the national government's foreign debt servicing through drawdowns on its dollar deposits with the BSP.
From January to May 2025, the BOP accumulated a $5.8 billion deficit, reversing a $1.6 billion surplus from the same period last year.
The BSP attributed this shift primarily to a sustained trade in goods deficit, which the Philippine Statistics Authority (PSA) estimates at $15.91 billion for January to April.
However, the impact of the trade gap was cushioned by strong remittance inflows from overseas Filipinos, foreign borrowings by the government, and foreign portfolio investments.
While external pressures persist, the BSP assures that the Philippines' gross international reserves remain a solid buffer, supporting the peso and overall financial stability.
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