Philippines’ balance of payments records $740M deficit in January 2024
The Philippine’s balance of payments (BOP) experienced a deficit of $740 million in January 2024, marking the highest shortfall in almost a year. This came as the government paid off its foreign currency debt obligations, according to data from the Bangko Sentral ng Pilipinas (BSP).
The $740 million BOP deficit is a stark contrast to the $3.08 billion surplus recorded in the same month in 2023 and is also the widest shortfall since February 2023 when a deficit of $895 million was registered.
The BOP reflects the difference in total values between payments into and out of the country over a period and is indicative of the Philippines’ cash flow statement with the rest of the world. A deficit in the BOP means that more dollars flowed out to pay for the importation of goods, services, and capital than what came in from exports, remittances from overseas Filipino workers (OFWs), business process outsourcing (BPO) earnings, and tourism receipts.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the BOP deficit to the continued trade deficit. However, he remains optimistic about potential improvement in the BOP data, driven by the government’s planned global bond issuances in the first quarter and other official development assistance.
The BSP reported that the country’s gross international reserves (GIR) level slipped to $103.3 billion as of end-January from $103.8 billion in December last year. Despite this decrease, the central bank assured that the foreign exchange buffer represents a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.
Ricafort added that any improvement in BOP and GIR could help provide a greater cushion for the peso exchange rate against any speculative attacks and strengthen the country’s external position.
