The Philippines posted a balance of payments (BOP) deficit of USD724 million in October, marking a stark contrast to the USD1.5 billion surplus recorded in the same month last year. This shift was driven by the National Government’s (NG) net withdrawals of foreign currency from its deposits with the Bangko Sentral ng Pilipinas (BSP), which were used to meet foreign debt obligations and finance various expenditures.
While the October figure raised concerns, the cumulative BOP surplus for the January to October 2024 period stands at a robust USD4.4 billion. This is a notable improvement from the USD3.2 billion surplus during the same period last year, driven by continued inflows from personal remittances, trade in services, and net foreign borrowings by the government. Additionally, foreign direct investments (FDI) and portfolio investments contributed to the overall surplus, strengthening the country’s external position.
Despite the October deficit, the country’s gross international reserves (GIR) remained substantial, totaling USD111.1 billion as of the end of October. This represents a slight decrease from the previous month’s USD112.7 billion but still provides a solid buffer equivalent to 8.0 months’ worth of imports and external payments. The GIR level remains more than adequate, standing at 4.4 times the country’s short-term external debt, further bolstering confidence in the Philippines’ economic stability.
The October BOP data highlights the cyclical nature of the country’s foreign exchange flows, with the government’s debt servicing requirements contributing to the short-term deficit. However, the continued surplus year-to-date signals the resilience of the Philippine economy, driven by strong remittances, healthy foreign investments, and manageable debt levels. The BSP’s careful management of the country’s external liquidity remains a critical factor in navigating global economic uncertainties and ensuring financial stability.
