Philippine Dollar Reserves Dip in December, BSP Reports

The Philippines’ gross international reserves (GIR) declined in December 2024, primarily due to the Bangko Sentral ng Pilipinas’ (BSP) foreign exchange operations and government debt repayments, according to preliminary data released on Tuesday.

Key Figures

The GIR stood at $106.837 billion as of end-December 2024, down from $108.488 billion in November. However, it remained higher than the $103.753 billion recorded in December 2023.

Reasons for the Decline

The BSP attributed the month-on-month decrease to:

• Net foreign exchange operations of the central bank.
• The drawdown on government deposits with the BSP to settle foreign currency debt obligations.
• Valuation adjustments in the BSP’s gold holdings, driven by a decline in global gold prices.

Peso Performance

The peso traded at the ₱58:$1 level for most of December, briefly depreciating to a record-low ₱59:$1 on December 19 before ending the year at ₱57.89:$1. The BSP noted it allows the market to dictate exchange rates but intervenes when necessary.

Debt and Liquidity Buffer

• The national government’s outstanding debt stood at ₱16.02 trillion as of end-October 2024, increasing by ₱126.95 billion from the previous month, primarily due to peso depreciation.
• The latest GIR provides a liquidity buffer equivalent to 7.5 months’ worth of imports and payments for services and primary income, and is 3.8 times the country’s short-term external debt based on residual maturity.

Economic Context

The GIR serves as a measure of the country’s ability to manage external shocks, settle import payments, and service foreign debt, underscoring its critical role in maintaining economic stability.