PH payments position hits widest deficit in over a decade

The Philippines opened the year with the widest balance of payments (BOP) deficit in 11 years, due mainly to the net foreign exchange operations of the Bangko Sentral ng Pilipinas (BSP) and drawdowns by the national government for external debt repayments.

The BOP position stood at a $4.078-billion deficit in January 2025, up from the $1.508-billion deficit in December 2024, and the $740-million deficit in January 2024. This is also the widest since the $4.480-billion deficit in January 2014.

The payments position takes into account Philippine transactions with the rest of the world during a specific period. A surplus means more funds entered the country, while a deficit means more funds exited.

“The BOP deficit in January 2025 reflected the Bangko Sentral ng Pilipinas’ net foreign exchange operations and drawdowns by the national government on its foreign currency deposits with the BSP to meet its external debt obligations,” the BSP said in a statement.

The Philippine peso opened January at P57.91:$1, and traded at the P58:$1 level for the rest of the month before closing at P58.365:$1 on January 31.

Latest data available from the Bureau of the Treasury (BTr) showed that the government’s total outstanding debt stood at P16.051 trillion as of end-December 2024, down by 0.2% from the record P16.090 trillion as of end-November 2024.

According to the BSP, the latest payments position reflects a decline in the final gross international reserves (GIR) level to $103.3 billion as of end-January 2025 from $106.3 billion as of end-2024.

“The latest GIR level represents a more than adequate external liquidity buffer,” the central bank said, as it is 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.

Moving forward, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the BOP and GIR are expected to improve in the coming months.

“BOP and GIR data could increase/improve, largely due to the $3.3-billion additional foreign commercial borrowings made by the national government in the latter part of January 2025, but could be reflected in February 2025,” he said in a separate commentary. — RSJ, GMA Integrated News