In a notable reversal, the country’s balance of payments (BOP), or what is left after the country’s foreign currency denominated obligations are deducted from its earnings, reverted to a surplus of USD3.1 billion in February, contrasting sharply against the USD196 million deficit recorded in the same month last year. The shift is attributed to strong contributions from the national government’s (NG) foreign currency deposits, including proceeds from the Republic of the Philippines (ROP) global bonds, as well as substantial net income from the Bangko Sentral ng Pilipinas’ (BSP) foreign investments.
While the February surplus was a welcome change, it has not yet fully offset the cumulative BOP deficit for the year, which reached USD992 million in February 2025, a slight increase from the USD936 million deficit posted in the same period in 2024. The deficit is primarily driven by a widening trade-in-goods gap, which reached USD5.1 billion in January 2025, up from the USD4.4 billion deficit recorded in January 2024, and net outflows from foreign portfolio investments. These negative factors were partly mitigated by inflows from foreign borrowings by the national government and personal remittances.
The positive BOP development is reflective of an overall improvement in the country’s external liquidity, which saw the final gross international reserves (GIR) increase to USG107.4 billion as of end-February 2025, up from USD103.3 billion in January 2025. This rise in GIR enhances the country’s capacity to meet external payment obligations, as the reserves now cover approximately 7.4 months’ worth of imports of goods and payments for services and primary income.
Moreover, the GIR remains well above the country’s short-term external debt, providing a robust buffer against potential economic shocks. Specifically, the reserves are roughly 3.8 times the country’s short-term external debt, based on residual maturity. This indicates a solid foundation for financing external obligations even during periods of adverse conditions, when export earnings or foreign loans might be insufficient.
The Bangko Sentral ng Pilipinas (BSP) continues to play a pivotal role in managing the nation’s foreign exchange and monetary policy, ensuring sufficient reserves to stabilize the peso and provide external financing during uncertain global market conditions. This month’s BOP surplus, along with the healthy increase in GIR, highlights the ongoing resilience of the Philippine economy despite the challenges posed by a persistent trade deficit and volatility in global financial markets.
As the Philippines navigates complex macroeconomic dynamics, the BSP’s measures remain crucial in maintaining financial stability and supporting sustainable growth, particularly in light of the country’s reliance on foreign capital inflows and remittances to buffer its external account.
