Philippines Posts $1.5 Billion BOP Deficit in December

The Philippines recorded a $1.5 billion balance of payments (BOP) deficit in December 2024, reversing the $642 million surplus posted in December 2023, according to the Bangko Sentral ng Pilipinas (BSP).

The December deficit reflected BSP’s net foreign exchange operations and the national government’s drawdown of deposits to service foreign currency debt obligations.

Despite the December shortfall, the full-year 2024 BOP position posted a surplus of $609 million. This, however, was significantly lower than the $3.7 billion surplus recorded in 2023.

Preliminary data pointed to a higher trade deficit, reduced net receipts from services, and lower net foreign borrowings by the national government as primary contributors to the decline.

Offsetting these pressures were continued net inflows from personal remittances and foreign portfolio and direct investments.

The country’s gross international reserves (GIR) fell to $106.3 billion at the end of December 2024 from $108.5 billion in November.

The BSP noted that this level still provides a strong external liquidity buffer, sufficient to cover 7.5 months’ worth of imports of goods and payments for services and primary income.

“The GIR level remains adequate and ensures foreign exchange availability to meet BOP financing needs, even under extreme conditions,” the BSP stated.

Additionally, the GIR is about 3.7 times the country’s short-term external debt based on residual maturity, underscoring the economy’s resilience to external shocks.

The decline in the BOP surplus reflects the challenges of rising global trade imbalances, fluctuating capital flows, and elevated debt service obligations.

However, remittance inflows and investment activities continue to play a stabilizing role in the country’s external position.