THE Philippines’ balance of payments (BOP) deficit ballooned in February, the Bangko Sentral ng Pilipinas (BSP) reported late on Thursday, widening to $2.28 billion from $373 million in January and reversing from the $3.09 billion-surplus seen a year earlier.
The result brought the year-to-date BOP to a $2.7-billion shortfall, more than the $992 million recorded in January-February 2024.
The BOP is a summary of a country’s transactions with the rest of the world for a specific period. It consists of the current account, which covers trade in goods, services and primary and secondary income (which includes overseas Filipino worker remittances); the capital account — capital transfers and nonfinancial assets; and the financial account or investments from abroad.
Union Bank of the Philippines chief economist Carlo Asuncion said the wider BOP deficit during the month reflected “heavier capital and financial account outflows and the absence of the one‑off government and BSP foreign‑currency inflows seen a year ago.”
This was worsened by seasonally high import payments and profit remittances early in the year, he added, rather than a decline in the country’s external fundamentals.
The country’s gross international reserves (GIR), meanwhile, increased to $113.3 billion as of the end of February, the BSP also reported on Thursday.
GIR comprises foreign-denominated securities, foreign exchange and other assets, including gold. It helps guarantee that the country has enough dollar liquidity to meet its import needs and foreign debt obligations, in addition to addressing currency volatility and acting as a buffer against external economic shocks.
The BSP said the current GIR level remained an adequate external liquidity buffer, being equivalent to seven and a half months’ worth of imports of goods and payments.
“Specifically, the latest GIR level ensures the availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme cases when there are no export earnings or foreign loans,” it noted.
The current GIR level is also enough to pay for roughly 4.3 times the country’s short-term external debt based on residual maturity.
This refers to outstanding external debt with an original maturity of one year or less, combined with principal payments on medium- and long-term loans from the public and private sectors that are due within the next 12 months.