The Philippines experienced a balance of payments (BOP) deficit of $1.5 billion in December 2024, contrasting with the $642 million surplus recorded in the same month of 2023. This shift reflects various economic factors, including a widening trade deficit, lower net receipts from trade in services, and net foreign borrowings by the national government. Despite these challenges, continued inflows from personal remittances, foreign portfolio investments, and direct investments partially mitigated the decline.
The Philippines recorded a balance of payments (BOP) deficit of $1.5 billion in December 2024, marking a reversal from the $642 million surplus observed in the same period of 2023, according to the Bangko Sentral ng Pilipinas (BSP). This development resulted in a cumulative BOP position of $609 million surplus for the full year 2024, a significant reduction from the $3.7 billion surplus achieved in 2023.
The BSP attributed the December 2024 deficit to net foreign exchange operations and the national government's drawdown on its deposits with the BSP to settle foreign currency debt.The Philippine peso's depreciation against the US dollar contributed to a rise in the country's national debt, which reached P16.09 trillion by the end of December 2024. This depreciation led to a P35.61 billion increase in the local valuation of US dollar-denominated debt. Meanwhile, the central bank highlighted that the lower surplus in 2024 stemmed from a widening trade deficit, reduced net receipts from trade in services, and net foreign borrowings by the national government. Counteracting this decline were continued net inflows from personal remittances, as well as net foreign portfolio and direct investments, as stated by the BSP.The Philippines' BOP position also indicates a decrease in the country's gross international reserves (GIR) level to $106.3 billion. This represents 7.5 months' worth of imports, along with payments for services and primary income. Notably, the latest GIR level is 3.7 times the country's short-term external debt. For context, the BOP provides a summary of a country's transactions with the rest of the world over a specific period, while the GIR reflects the BSP's foreign assets, primarily held as investments in foreign-issued securities, foreign exchange, and monetary gold. According to the BSP, a healthy GIR level should be capable of financing at least three months' worth of the country's imports, service payments, and primary income. Additionally, it should ideally cover at least 100% of the country's foreign debt payments due within the subsequent 12 months
BALANCE OF PAYMENTS ECONOMIC TRENDS PHILIPPINES NATIONAL DEBT TRADE DEFICIT FOREIGN EXCHANGE OPERATIONS GROSS INTERNATIONAL RESERVES
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