The country’s balance of payments (BOP) position, or what is left after Manila’s foreign-currency expenses are deducted from its foreign currency earnings, posted a significant shift in December 2024, registering a deficit of USD1.5 billion, reversing the USD642 million surplus seen in the same month of 2023. The December deficit was driven by the Bangko Sentral ng Pilipinas’ (BSP) net foreign exchange operations, as well as the national government’s (NG) use of its deposits with the BSP to settle foreign currency debt obligations.
Despite this monthly reversal, the country’s cumulative BOP for 2024 recorded a surplus of USD609 million. While positive, this was a notable decline from the USD3.7 billion surplus posted in 2023, reflecting broader economic challenges, including a widening trade-in-goods deficit and weaker net receipts from trade in services. Moreover, lower net foreign borrowings by the government contributed to the softer surplus.
However, the decline in the overall surplus was somewhat offset by continued robust inflows from personal remittances, along with strong net foreign portfolio and direct investments. These inflows provided a vital buffer against the negative impacts of the trade imbalance and lower government borrowing.
In parallel with the BOP shift, the country’s gross international reserves (GIR) dipped to USD106.3 billion by the end of December 2024, down from USD108.5 billion in November. Despite the decline, the level of reserves remains more than adequate, representing 7.5 months of import coverage and roughly 3.7 times the country’s short-term external debt based on residual maturity.
The decrease in reserves and the overall BOP deficit underscore the challenges facing the Philippines’ external sector, but the country’s strong reserve buffer continues to provide a crucial safety net, ensuring stability in the face of global economic volatility. The lower cumulative surplus in 2024 may signal the need for strategic adjustments, but the resilience of key inflows suggests that the economy remains fundamentally sound.
