BoP position swings to $2-B deficit

By Luisa Maria Jacinta C. Jocson, Senior Reporter

THE country’s balance of payments (BoP) position swung to a $2-billion deficit in March, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Central bank data showed the BoP posted a deficit of $1.97 billion in March, a reversal from the $3.09-billion surplus in February and the $1.17-billion surfeit in the same month a year ago.

The BoP measures the country’s transactions with the rest of the world. A deficit indicates more funds exited the Philippines while a surplus means more money entered the country than left.

“The BoP deficit reflected the National Government’s (NG) drawdowns on its foreign currency deposits with the BSP to meet its external debt obligations, as well as the BSP’s net foreign exchange operations,” the central bank said.

Latest data from the BSP showed the Philippines’ outstanding external debt rose by 9.8% to $137.63 billion as of end-December 2024 from a year prior.

This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024 from 28.7% at end-2023.

In the first quarter, the country’s BoP position registered a $2.96-billion deficit, also a reversal from the $238-million surplus in the same period a year ago.

“Based on preliminary data, the year-to-date deficit reflected mainly the widening trade in goods deficit,” the BSP said.

Latest data from the local statistics authority showed the trade-in-goods deficit widened by 4.6% to $8.28 billion in the January-February period from the $7.91-billion gap last year.

“This decline was partly muted, however, by the continued net inflows from personal remittances, foreign direct investments, and foreign borrowings by the NG,” it added.

At its end-March position, the BoP reflected a final gross international reserve (GIR) level of $106.7 billion, lower than $107.4 billion as of end-February.

Despite this, the BSP said the latest GIR provides a “robust external liquidity buffer.”

“Specifically, the latest GIR level ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” it added.

The dollar reserves were enough to cover 3.6 times the country’s short-term external debt based on residual maturity.

It was also equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

An ample level of foreign exchange buffers safeguards an economy from market volatility and is an assurance of the country’s capability to pay debt in the event of an economic downturn.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the shift to a deficit position is due to several factors, such as the wider trade deficit amid higher imports.

He also cited the “larger debt service payments, or forex (foreign exchange) operations by the BSP to manage (peso) volatility.”

“It’s also possible that earlier inflows such as borrowings, remittances, or investment-related receipts moderated in March,” Mr. Rivera said.

“This underscores the sensitivity of the Philippines’ external position to global market movements and domestic financing needs. Moving forward, careful management of external debt and trade competitiveness will be crucial to maintaining external stability.”

This year, the BSP expects the country’s BoP position to end at a $4-billion deficit, equivalent to -0.8% of gross domestic product.

In 2024, the BoP position stood at a surplus of $609 million, plunging by 83.4% from the $3.672-billion surplus as of end-2023.