BOP posts US$895-M deficit in February 2023

The country’s overall balance of payments (BOP) position posted a deficit of US$895 million in February 2023, higher than the US$157 million BOP deficit recorded in the same month last year.

The BOP deficit in February 2023 reflected outflows arising mainly from the National Government’s (NG) net foreign currency withdrawals from its deposits with the Bangko Sentral ng Pilipinas (BSP) to settle its foreign currency debt obligations and pay for its various expenditures.

Notwithstanding the deficit in February, the cumulative BOP position remained at a surplus of US$2.2 billion in the first two months of the year.

This level is a reversal from the US$259 million deficit recorded in the same period a year ago.

Based on preliminary data, the cumulative BOP surplus reflected inflows that stemmed mainly from the Global Bond issuance of the NG in January 2023, personal remittances, and foreign portfolio investments.

The gross international reserves (GIR) level decreased to US$98.2 billion as of end-February 2023 from US$100.7 billion as of end-January 2023. Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.^[1]

Moreover, it is also about 5.9 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.^[2]

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^[1] 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.

^[2] 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.