In observance of the Holy Week, the Philippine News Agency’s online news service will be off on March 29, Good Friday, and March 30, Black Saturday. Normal operations will resume on March 31, Easter Sunday.

— The Editors

RCBC economist eyes above $100-B GIR this year

By Joann Villanueva

September 17, 2020, 8:27 pm

<p>RCBC chief economist Michael Ricafort </p>

RCBC chief economist Michael Ricafort 

MANILA – Philippines foreign reserves, which hit a record-high USD98.954 billion last August, are seen to surpass monetary officials USD100-billion forecast this year due to recovery of remittance inflows and narrower trade deficit, among others.
 
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the rise in the August 2020 gross international reserves (GIR) may be attributed to profits of the government and other Philippine residents’ investments overseas, and proceeds from overseas borrowings “as record low interest rates/financing costs made borrowing more compelling.”
 
Ricafort said foreign reserves “could still post uncharted highs and could breach the USD100 billion mark soon” as trade gap narrows by more than USD1 billion per month relative to 2019 levels since the lockdowns, aimed to lessen transmission of coronavirus disease (Covid-19), were implemented last March.
 
“Continued growth in the country's BPO (business process outsourcing) sector amid the need for greater outsourcing worldwide (to be) able to make global businesses more competitive amid Covid-19 challenges could also help bolster the country's GIR to new all-time highs,” he said.
 
The end-August 2020 foreign reserves of the country are equivalent to about nine months worth of imports and payments of services and primary income, way higher than international standards of about three to four months requirements of an economy.
 
“Record high GIR may also further strengthen the country's external position, which in turn, fundamentally supports the country's favorable credit ratings as seen recently,” Ricafort said.
 
Last May, S&P Global affirmed its BBB+ ratings on the country and Japan Credit Rating Agency (JCRA) upgraded its rating on the Philippines to A- with a stable outlook last June, the country’s first A-level rating, due to continued improvement of domestic fundamentals.
 
Last July, Moody’s Investors Service affirmed its Baa2 ratings on the country.
 
Ricafort said these rating actions “reflect the Philippines' improved economic and credit fundamentals, as well as improvements in fiscal performance in recent years.”
 
These improvements, he said, “could help attract more/bigger roster of international investments and international credit/loans at much lower cost and with better terms into the country, in view of the need to finance Covid-19 programs and other economic stimulus measures needed to help sustain the economic recovery.”
 
“(These) could also further help boost the country's GIR to new record highs, going forward,” he added. (PNA)
 
 

Comments