RCBC chief economist Michael Ricafort
MANILA – The country’s foreign reserves are expected to further improve in the coming months as the economy reopens and structural sources of US dollar such as remittances and business process outsourcing (BPO) continue to show resilience.
On Thursday, the Bangko Sentral ng Pilipinas (BSP) reported that the country’s gross international reserves (GIR) rose to USD109.08 billion as of last February, near its record-high of USD110.12 billion in end-2020.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort expects the country’s structural US dollar inflows to continue boosting the foreign reserves as well as the balance of payment (BOP) position.
This, even with the slower growth of inflows from overseas Filipino workers remittances and revenues of the business process outsourcing (BPO) sector and the Philippine Offshore Gaming Operators (POGO), among others, he said.
Ricafort said the country’s external position, which has been cited by debt raters as among the strengths of the domestic economy, is also expected to get further backing from the foreign reserves.
The country has received several positive credit rating actions even during the pandemic because of the improved fundamentals.
Ricafort expects the country to further attract foreign investments which will boost the foreign reserves.
He said foreign creditors are also expected to notice this improvement and this bodes well for the government’s borrowing program since this is expected to provide lower cost and better loan terms.
Another thing that will benefit from the improvement of the gross international reserve (GIR) is the peso, he added.
“Going forward, GIR could also post new record highs if the economy reopens further and if the global economy recovers further in view of increased Covid-19 (coronavirus disease 2019) vaccine rollouts in the US/worldwide, as well as locally...,” he said.
Ricafort said improved economic recovery prospects globally can lead to more inflows of OFW remittances, BPO revenues, and foreign investments into the country.
These factors are, however, seen to be countered by a possible increase of trade deficit or faster recovery of imports, he added. (PNA)
