Philippines opens 2024 with $740-M BOP deficit

The Philippines opened the year with a balance of payments (BOP) deficit in January, the biggest in nearly a year to reflect outflows from the government’s payments of its foreign currency debt, the Bangko Sentral ng Pilipinas (BSP) reported.

Data released by the central bank showed that the BOP level was a $740-million deficit in January, following the $642-million surplus in December 2023 and the $3.081-billion surplus in January 2023.

The latest BOP deficit is also the widest since the $895-million deficit recorded in February 2023, when the government withdrew from its foreign currency deposits to settle its debt obligations.

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 January 2024 reflected outflows arising mainly from the national government’s payments of its foreign currency debt obligations,” the BSP said in an accompanying statement.

Latest data available from the Bureau of the Treasury (BTr) show that the government closed 2023 with a record-high sovereign debt balance of P14.62 trillion, which it expects to grow to P15.8 trillion this year.

Data from the Department of Budget and Management (DBM) also shows that the government is set to borrow P2.46 trillion this year — P606.85 billion in gross external borrowings, and P1.853 trillion in gross domestic borrowings.

The latest figures brought the gross international reserves (GIR) level down to $103.3 billion from $103.8 billion in end-December 2023, which the BSP said was “more than adequate liquidity buffer.”

This is more than 7.7 months’ worth of imports of goods and payments of services and primary income, and it is also about 6.0 times the Philippines’ short-term external debt based on original maturity, and 3.9 times based on residual maturity.—AOL, GMA Integrated News