The country's balance of payments (BOP) reverted to a deficit position of $740 million in January this year from a surplus of $642 million in December 2023 due to government payments of past foreign currency loans.
The January BOP is also a reversal of the $3.081-billion surplus recorded in January 2023, based on Bangko Sentral ng Pilipinas (BSP) data.
The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. A BOP surplus position means there are more exports or inflows than imports or outflows, while a deficit position is the opposite.
The BSP also announced a final gross international reserves (GIR) of $103.269 billion as of end-January, down from December 2023’s $103.753 billion.
“The BOP position reflects a decrease in the final gross international reserves,” said the BSP.
However, “notwithstanding the decline, the latest GIR level represents a more than adequate external liquidity buffer.”
The latest data showed the GIR is equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income. It is also about six times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.
The BSP announces the GIR level twice in a month, first as preliminary number and then as final GIR when the BOP is released.
Meanwhile, the reversal in the BOP position was attributed to outflows from the National Government payments of its debt obligations. The BSP does not disclose how much of past loans were recovered.
Last year, the full-year BOP ended in a surplus of $3.672 billion, surpassing the BSP projection of $1.1 billion for the year, amid improved trade, increased inflows and government’s higher foreign borrowings.
The 2023 BOP surplus position was in stark contrast to the $7.263 billion deficit reported in 2022.
The BSP said last year’s surplus was due to improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and NG foreign borrowings. It also noted that net inflows from foreign direct investments (FDI) contributed to the surplus, albeit lower during the period.
In addition, the BOP surplus in December reflected inflows from the government’s net foreign currency deposits with the central bank, as well as net income from the BSP’s investments abroad and from its net foreign exchange operations.
Last Dec. 15, 2023, the BSP’s policy-making arm the Monetary Board approved revisions to the overall BOP outlook for 2024.
For this year, the BSP revised the BOP forecast lower to $400 million surplus versus the earlier projection of $1 billion surplus.
BSP officials said prospects for 2024 are better amid the recovery of trade activity, strong growth in travel receipts and stable remittances. However, FDI will remain a challenge due to tighter financial conditions as well as lower business process outsourcing revenues.
The latest net FDI as of end-November 2023 amounted to $7.581 billion which was 13.3 percent lower compared to $8.741 billion same period in 2022.