INTERNATIONAL reserves expanded to a record US$75.6 billion as of end September 2011, much higher than the country's external debt of US$6.4 billion, providing an ample buffer against external shocks, high-ranking officials of the country reported Monday.
In an economic briefing held here, senior officials of the economic cluster agencies and the Bangko Sentral ng Pilipinas (BSP) noted that the increase in reserves indicate the higher manageability of the Philippines to pay its external debt which debt to gross domestic product (GDP) ratio has been cut by half in six years.
They said reserve holdings can cover 10.6 times the country's short-term external debt on original maturity and 11.1 months of imports. The growing international reserves are structural in nature and are supported by strong remittance flows, robust business process outsourcing (BPO) industry receipts and increasing tourism revenues.
In 2004, the government reported that the gross international reserves was at US$16.2 billion that constantly soared high during the following years until September this year to US$75.6 billion.
Meanwhile, Finance Undersecretary Gil Beltran highlighted that fiscal sustainability remains at the forefront of the Aquino administration's economic governance agenda.
"Our target of attaining two percent deficit to GDP by 2013 is achievable given that we are addressing key areas to improve our revenue effort. Despite the global economic conditions, our revenues grew close to 14 percent in the first half, surpassing the country's 8.8 percent economic growth. Our administrative measures such as strict enforcement of (government tax recovery efforts) are sending the right signals to the market," Beltran said in a statement distributed to media during the economic briefing Monday.
He added that the country's improving balance sheet is evidenced by the declining debt to GDP to 51 percent as of June 2011.
"Netting out the debt holdings of government agencies of Philippine debt, real debt of the Philippines is actually just 42.2 percent as of 2010 of GDP, thereby, moving the Philippines much closer to its peers. The country's foreign debt to GDP is down to 29 percent," he said adding: "Our goal is to bring it down to 20 percent."
This, as senior officials of the economic cluster agencies reaffirmed their commitment to good economic governance as key to achieving an investment grade status. Following the recent string of positive rating actions from credit ratings agencies specifically Standard & Poor's, Moody's Investors Service, Fitch Ratings and Japan Credit Rating Agency, the Aquino administration is intensifying efforts to further improve the country's credit profile.
Published in the Sun.Star Cagayan de Oro newspaper on October 25, 2011.
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