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MANILA, Philippines —Outflows from payments made by the government for its maturing foreign borrowings swung the Philippines’ dollar position to a deficit in January, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.
The country’s balance of payments (BOP) position posted a deficit of $740 million in the first month of the year, a reversal from the $3.1-billion surplus a year ago.
The BOP summarizes an economy’s transactions with the rest of the world during a certain period.
READ: PH balance of payments position back to surplus in 2023
A surplus arises when more foreign funds enter the economy against those that left, giving the country enough resources to pay its foreign debts and meet import requirements. A BOP deficit means the reverse happened.
Near one-year high
This year, the central bank forecasts a BOP surplus of $400 million, smaller than the previous projection of a $1-billion excess on expectations of bigger dollar outflows from a wider trade deficit.
Data showed the dollar deficit in January was the largest in nearly a year or since the $895 million BOP gap recorded in February last year.
“The BOP deficit in January 2024 reflected outflows arising mainly from the National Government’s payments of its foreign currency debt obligations,” the central bank said in a statement.
Trade deficit
Apart from foreign debt payments, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said last month’s BOP gap also stemmed from the country’s continued trade deficit.
But Ricafort said those outflows were “offset by the continued inflows of OFW remittances, BPO revenues, foreign tourism receipts, foreign direct investments and other structural US dollar inflows of the country.”
READ: Weaker external position seen in 2024 on tepid exports, tourism receipts
The BSP said the return to a BOP deficit reflected a decrease in the country’s gross international reserves (GIR) to $103.3 billion in January, from the preceding month’s level of $103.8 billion.
But the central bank said the buffer funds remained “more than adequate” to cover 7.7 months’ worth of the country’s import needs. The GIR was also about 6 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity. INQ