3 weeks ago
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Keisha Ta-Asan - The Philippine Star
February 21, 2025 | 12:00am
MANILA, Philippines — The country’s balance of payments (BOP) swung to a deficit of $4.08 billion in January, the widest in 11 years, amid the Bangko Sentral ng Pilipinas’ foreign exchange operations and as the government paid its foreign currency debt obligations, according to the BSP.
Latest BSP data showed that the January BOP was nearly six times higher than the $740 million shortfall in the same month last year.
This also marked the widest gap in 11 years or since the $4.5 billion deficit recorded in January 2014.
The BSP said last month’s deficit was a reflection of the outflows arising mainly from its net foreign exchange operations and the government’s payments of foreign currency debt obligations.
The BOP is the difference in total values between payments into and out of the country over a period. It is also a measure of the country’s cash flow statement with the rest of the world.
A deficit means that more dollars flowed out to pay for the importation of more goods, services and capital than what came in from exports, remittances from overseas Filipino workers, business process outsourcing earnings and tourism receipts.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the BOP deficit to the volatility in the foreign exchange market.
The peso weakened against the dollar last month amid increased market uncertainty, largely brought about by possible protectionist policies by US President Donald Trump as well as other geopolitical risks such as tighter US sanctions on Russia’s oil exports, Ricafort said.
Moving forward, Ricafort said the BOP data could still improve, driven by the proceeds of the government’s global bond issuances in the first quarter and other official development assistance.
Meanwhile, the BSP reported that the country’s gross international reserves (GIR) level slipped to $103.3 billion as of end-January from $106.3 billion in December last year.
The GIR level represents a more than adequate external liquidity buffer equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income. It is also about 3.7 times the country’s short-term external debt based on residual maturity.
The BSP expects the BOP position to hit a surplus of $2.1 billion (0.4 percent of gross domestic product) for this year.
