BOP deficit declines to US$216 million in November 2023

The country’s overall balance of payments (BOP) position posted a deficit of US$216 million in November 2023, lower than the US$756 million BOP deficit recorded in the same month last year.

The BOP deficit in November 2023 reflected outflows arising mainly from the National Government’s (NG) payments of its foreign currency debt obligations.

Notwithstanding the deficit in November, the cumulative BOP position registered a surplus of US$3.0 billion in the first eleven months of the year, which was a reversal from the US$7.9 billion deficit recorded in the same period a year ago.

Based on preliminary data, this development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the NG.

Further, net inflows from foreign direct investments contributed to the surplus, albeit lower during the covered period.^[1]

The gross international reserves (GIR) level increased to US$102.7 billion as of end-November 2023 from US$101.0 billion as of end-October 2023.^[2]

The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income.^[3]

Moreover, it is also about 6.0 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.^[4]

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^[1] Based on the preliminary data from the Philippine Statistics Authority’s (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-October 2023 reached US$44.1 billion, down from the US$50.0 billion deficit posted in the same period last year.

^[2] The GIR level increased month-on-month, notwithstanding the BOP deficit in November 2023, due mainly to the upward revaluation adjustments in BSP gold holdings and foreign currency denominated assets. The impact of
non-economic transactions such as revaluation adjustments is excluded in the computation of the BOP position.

^[3] Specifically, it ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.

^[4] Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.