PHL DOLLAR RESERVES HIT $99.72B IN JANUARY

THE country’s international reserves contracted 7.4 percent year-on-year in January, according to data from the Bangko Sentral ng Pilipinas (BSP).

BSP data showed that the country’s Gross International Reserves (GIR) declined to $99.72 billion in January 2023 from $107.69 billion in January 2022.

R izal Commercial Banking Corp.

(RCBC) Chief Economist Michael Ricafort said this decline may have been caused by the weak peso.

“ The year-on-year decline in the GIR somewhat correlated with the relatively weaker peso in earlier months of 2022,” Ricafort said in RCBC’s Hexagon Perspective.

In the coming months, Ricafort said the GIR could be driven by Overseas Filipino worker (OFW) remittances, revenues from the business process outsourcing (BPO) sector, higher exports, and foreign tourism revenues.

Other factors include foreign direct investment (FDI) inflows, hot money inflows, proceeds from the proposed US dollar-bond issuances, and foreign borrowings by the national government in the first semester of 2023.

However, Ricafort said these drivers may be offset by the government’s plans to reduce foreign borrowings relative to domestic borrowings in the coming months and years to better manage the country’s foreign borrowings.

“[GIR growth may be] offset by the still relatively wider trade deficit/net imports compared to recent years and some net foreign debt payments, going forward,” he said.

The BSP said the GIR in January is higher compared to the end-December 2022 level of $96.1 billion.

The BSP said the January 2023 GIR level is 6 times the country’s short-term external debt based on original maturity and 4 times based on residual maturity.

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MARCOS SEEKS STRONGER ECONOMIC TIES WITH JAPAN

By Samuel P. Medenilla sam_medenilla

PRESIDENT Ferdinand R. Marcos Jr. said he will forge more partnerships with other Asian nations to boost the Philippines’s international competitiveness.

M arcos also said his trip to Japan is part of a “larger foreign policy agenda” of his administration to strengthen security and economic bilateral relations with its Asian neighbors.

We will seek to further strengthen the bonds and friendship with the close neighbors, [which are] like-minded and future-oriented like us in many way and the more reliable partners of both in times of crisis and of prosperity,” the President said in his speech before his departure to Tokyo at the Villamor Airbase in Pasay City last Wednesday.

S ince assuming the presidency last July, Marcos has already visited Indonesia, Singapore, Cambodia, Thai - land, and China which are all in Asia.

Bilateral deals

DURING his visit to Japan from February 8 to 12, Marcos will be meeting with Japanese Prime Minister Kishida Fumio for the signing of bilateral agreements on humanitarian assistance and disaster relief, infrastructure, and digital cooperation.

Many of these MOUs [memorandum of understanding] and MOAs [memorandum of agreements], and other documents we will be witnessing are in fact the product of our meetings in New York and also in APEC [Asia-Pacific Economic Cooperation],” he said.

The President said he will also be pursuing agreements on agriculture, renewable energy, digital transformation, infrastructure, defense and security.

I look forward to bringing home as they say, more of these agreements that will be of benefit to the transformation of our economy and to mitigate

See “Marcos,” A2

THE Bangko Sentral ng Pilipinas (BSP) believes inflation may have already peaked in January 2023.

However, BSP Governor Felipe M. Medalla told reporters on Wednesday that “surprise price shocks” could still happen in the coming months.

The pronouncements made by the central bank governor came a day after the Philippine Statistics Authority (PSA) announced that January inflation reached 8.7 percent, the highest in 15 years. It [inflation in January] was actually higher than the high end of our forecast. Most likely [peaked]. Of course, I can’t rule out another surprise supply shock,” Medalla said.

Based on PSA data, core inflation reached 7.4 percent. Core inflation is often considered an indicator of long-term inflation.

Core inflation, which excludes certain highly volatile food and non-food items, posted a 7.4 percent growth.

I n January 2022, it was only at 1.8 percent. Core inflation was at 6.9 percent in December 2022.

National Statistician Claire Dennis S. Mapa said this inflation rate was the highest since April 1999 when it hit 7.6 percent.

Mapa said the PSA and BSP recently made changes to the composition of core inflation. The PSA and BSP removed items that had volatile prices comprising 29.6 percent of the weight of items included in headline inflation.

He said some of the items that were removed were cereals, fish, meat, certain vegetables, electricity, diesel, and liquefied hydrocarbons, among others.

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Th e latest GIR level is also more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.

The month-on-month increase in the GIR level reflected m ainly the National Government’s [NG] net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds, the upward valuation adjustments in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market, and net income from the BSP’s investments abroad,” BSP said.

Si milarly, the net international reserves, which refers to the difference between the BSP’s reserve a ssets and reserve liabilities, increased by $3.6 billion to US$99.7 b illion as of end-January 2023 from the end-December 2022 level of $96.1 billion. The reserve liabilities are composed of short-term foreign debt a nd credit and loans from the International Monetary Fund (IMF).

The BSP also said the level of GIR, as of a particular period, is considered adequate, if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period.

S hort-term debt based on residual maturity refers to outstanding external debt with original m aturity of one year or less, plus principal payments on mediumand long-term loans of the public and private sectors falling due w ithin the next 12 months.