OPTIMISTIC FORECAST. Rizal Commercial Banking Corp. chief economist Michael Ricafort is optimistic about the rise in the country's gross international reserves amid the decline at the end of April to USD101.51 billion. He said Saturday (May 6, 2023) structural inflows such as from Overseas Filipino Workers and revenues of business process outsourcing are projected to remain strong and buoy the country's foreign reserves. (PNA file photo)
MANILA – An economist has forecast a rise in the country's gross international reserves (GIR) in the coming months despite the drop to USD101.51 billion as of the end of April.
In a report released on Saturday, Rizal Commercial Banking Corp. chief economist Michael Ricafort noted that while the foreign reserves went down from the end-March level of USD101.55 billion, it remains to be equivalent to 7.6 months of imports, just like in the previous month, which is way higher than the international threshold of three to four months cover.
"For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW (Overseas Filipino Workers) remittances, BPO (business process outsourcing) revenues, exports (though offset by imports), relatively fast recovery in foreign tourism revenues (resumed since Feb. 10, 2022; group tours from China resumed since the latter part of January 2023), as well as continued foreign investment/FDI inflows among pre-pandemic highs," he said.
The BSP, in a press release Friday night, attributed the drop in the GIR to payments made by the national government for its foreign currency-denominated debt.
Ricafort added that because the GIR level remains high, it "could still provide greater buffer/support/cushion on the peso exchange rate vs. any speculative attack."
He said the current level of the country’s foreign reserves is "still relatively high" and "could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings."
The country's credit ratings have been affirmed several times by Fitch Ratings, Moody's Investors Service, and S&P and were even upgraded to A-level investment grade by the Japan Credit Rating Agency even during the pandemic, which authorities and analysts said are good developments.
Ricafort said these affirmations of the credit ratings are "sign(s) of resilience despite the Covid-19 pandemic that caused downgrades in other countries around the world."
"These reflect the Philippines' improved economic and credit fundamentals, as well as improvements in fiscal performance in recent years that 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 various Covid-19 programs and other economic stimulus measures needed to help sustained the economic recovery, thereby could also further help boost the country's GIR, going forward," he added. (PNA)
