MANILA— The Philippine central bank said on Monday the country’s current account deficit is financeable, as liquidity buffers remain robust, after Fitch Ratings affirmed the nation’s investment-grade credit rating with a “negative” outlook.
The Bangko Sentral ng Pilipinas (BSP), in a statement, also said its policy toolkit and non-monetary measures can help manage pressures on the peso and bring high inflation back to a target-consistent path.
The toolkit includes interest rate adjustments, a flexible exchange rate, and the use of foreign exchange reserves, it said.
The current account deficit, which Fitch said could widen to 5% of GDP in 2022, is “financeable considering that liquidity buffers remain robust as of end-September”, the BSP said.
The BSP cited the country’s gross international reserves at $93 billion, which it said was “a more than adequate external liquidity buffer” equivalent to 7.4 months’ worth of imports of goods and payments services.
The reserves, which can also cover 4.0 to 6.6 times the country’s short-term external debt, exceeded the three-months’ worth of imports that the International Monetary Fund suggests as a rule of thumb in reserve adequacy, the BSP said.
—Reporting by Enrico dela Cruz; Editing by Kanupriya Kapoor
