Foreign debt payments led to a deficit in the Philippine balance of payments (BOP) position in February, with outflows totaling $196 million. However, this deficit was much smaller compared to the previous year’s $895 million gap, according to data released by the Bangko Sentral ng Pilipinas (BSP).
The decrease in the BOP deficit was attributed to a narrower trade gap and a decline in imports, resulting in a more manageable shortfall. The central bank noted that most of the outflows in February were from the government’s foreign currency debt obligations.
Economists, such as Michael Ricafort from Rizal Commercial Banking Corp. (RCBC), believe that the shrinking trade deficit and lower oil prices could improve the Philippine dollar position in the coming months. The country’s gross international reserves (GIR) decreased to $102 billion in February, but BSP assured that this level is sufficient to cover 7.5 months’ worth of imports.
Despite the recent deficit, BSP projects a BOP surplus of $700 million for 2024, higher than the initial forecast of $400 million. However, this revised prediction is lower than the $3.7-billion surplus recorded in 2023. Looking ahead to 2025, BSP anticipates a BOP deficit of $500 million.
