Philippine payments position swings to $895-M deficit in February

The Philippines’ balance of payments (BOP) position swung to a deficit in February after two straight months of posting a surplus, as the government withdrew from its foreign currency deposits to settle its debt obligations.

Data released by the Bangko Sentral ng Pilipinas (BSP) late Monday evening show that the BOP deficit stood at $895 million in February, following the $3.081-billion surplus in January, and wider than the $157-million deficit in February 2022.

The BOP consists of 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 left.

“The BOP deficit in February 2023 reflected outflows arising mainly from the national government’s net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the central bank said in an accompanying statement.

Latest data available from the Bureau of the Treasury (BTr) show that the government closed 2022 with a P13.418-trillion running debt balance, down 1.7% or P225.31 billion from the record-high P13.644 trillion in November.

The year-to-date BOP position posted a $2.185-billion surplus, reversing the $259-million deficit recorded in the comparable period of 2022.

“Based on preliminary data, the cumulative BOP surplus reflected inflows that stemmed mainly from the global bond issuance of the national government in January 2023, personal remittances, and foreign portfolio investments,” the BSP said.

Cash remittances — money transfers coursed through banks or formal channels — stood at $2.762 billion in January, lower than the historic $3.199 billion in December 2022.

The latest figures brought the gross international reserves (GIR) level down to $98.2 billion from $100.7 billion in January, which the BSP said was a “more than adequate liquidity buffer.”

This is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. It is also 5.9 times the country’s short-term external debt based on original maturity, and 3.9 times based on residual maturity.

The BSP last week said it expects the BOP to yield a $1.6-billion deficit this year, equivalent to -0.4% of the gross domestic product (GDP) and lower than the previous forecast of $5.4 billion.—AOL, GMA Integrated News