The Bangko Sentral ng Pilipinas (BSP) said the country’s balance of payments (BOP) position reversed to a deficit of $752 million in January due to National Government payment of past foreign currency loans.
This was lower compared to the deficit reported same time in 2020 of $1.355 billion.
The January BOP deficit reversed December 2020’s $4.236 billion surplus.
According to the BSP the latest BOP deficit “reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations.”
Inflows from the BSP’s foreign exchange operations and income from its investments abroad offset these outflows, said the BSP.
The BSP also reported late Wednesday a final January gross international reserves (GIR) number of $108.67 billion, slightly lower than what it announced previously of $108.80 billion. The January GIR is lower than December 2020’s $110.12 billion.
The BSP reiterated that the latest GIR level is still adequate external liquidity buffer “which can help cushion the domestic economy against external shocks.”
The $108.67 billion GIR – which is composed of foreign assets of the BSP invested in foreign-issued securities, monetary gold, and foreign exchange -- is equivalent to 11.6 months’ worth of imports of goods and payments of services and primary income, and about 9.4 times the country’s short-term external debt based on original maturity as well as five times based on residual maturity.
In 2020, the BOP was a surplus of $16.02 billion, an all-time high. The surplus came from higher GIR which was boosted by the government’s foreign borrowings while the pandemic-induced recession resulted to weak import demand.
The end-2020 BOP surplus surpassed the BSP’s estimate of $12.8 billion.
For this year, the BSP is projecting a BOP surplus of $3.3 billion. With a recovering economy, the lower merchandise trade deficit along with sustained net inflows from personal remittances, foreign direct investments, and trade in services are expected to prop up the BOP position this year.