By Luisa Maria Jacinta C. Jocson, Reporter
THE PHILIPPINES’ balance of payment (BoP) surplus sharply narrowed in 2024, falling wanting the central bank’s full-year projection.
Data from the Bangko Sentral ng Pilipinas (BSP) showed the full-year BoP position stood at a surplus of $609 million last yr, plunging by 83.4% from the $3.672-billion surplus at end-2023.
This was also much lower than the BSP’s full-year projection of $3.5 billion.
The BoP shows a glimpse of the country’s transactions with the remaining of the world. A surplus shows that more funds got here into the country, while a deficit means more cash fled.
“Based on preliminary data, the decline within the cumulative BoP surplus was resulting from higher trade-in-goods deficit and lower net receipts from trade in services and net foreign borrowings by the National Government (NG),” the BSP said.
Data from the local statistics agency showed the trade deficit widened by 3.2% yr on yr to $49.96 billion within the January-November period.
Outstanding external debt rose to a record $139.64 billion as of end-September, data from the BSP showed.
“This decline was partly muted, nonetheless, by the continued net inflows from personal remittances in addition to net foreign portfolio and direct investments,” the central bank added.
In December alone, the BoP swung to a deficit of $1.508 billion, a reversal of the $642-million surplus a yr earlier.
“The BoP deficit in December 2024 reflected the BSP net foreign exchange operations and drawdown on the NG deposits with the BSP to repay its foreign currency debt obligations.”
Last yr, the federal government raised $2 billion from global bonds in May and one other $2.5 billion from its dollar bond offer in August.
At its end-December position, the BoP reflects a gross international reserve (GIR) level of $106.3 billion, down by 2% from $108.5 billion as of end-November.
“Specifically, the most recent GIR level ensures availability of foreign exchange to fulfill balance of payments financing needs, resembling for payment of imports and debt service, in extreme conditions when there aren’t any export earnings or foreign loans,” the central bank said.
The extent of dollar reserves was enough to cover 7.5 months of imports and payments of services and first income. It’s also reminiscent of about 3.7 times the country’s short-term external debt based on residual maturity.
Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said the broader BoP deficit in December was partly resulting from the trade shortfall in recent months.
“There may be persistent import growth, particularly in energy, food and capital goods that likely outpaced export performance,” said John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies.
“The continuing decline in exports resulting from weaker global demand particularly from major trading partners like China has exacerbated the trade deficit, a serious component of the present account,” he added.
Mr. Ricafort said the peso volatility, especially from November to December, might need affected the BoP position.
“The strong US dollar also increased debt servicing costs for US dollar-denominated obligations,” Mr. Rivera added.
At end-2024, the peso closed at P57.845, declining by P2.475 or 4.28% from its end-2023 finish of P55.37 against the dollar.
The peso fell to a record-low P59 level thrice last yr — twice in November and once in December.
Mr. Rivera said the recovery in tourism receipts and business process outsourcing revenues won’t have been enough to “fully offset the drag from the trade imbalance.”
“Also, the federal government and personal sector’s efforts to settle maturing foreign debt obligations can have contributed to outflows within the financial account, worsening the general BoP position,” he added.
For the approaching months, the BoP could improve if structural inflows proceed to extend, Mr. Ricafort said.
“Any improvement in BoP data and in GIR data for the approaching months could still help provide a greater cushion for the peso exchange rate versus the US dollar especially against any speculative attacks, in addition to help strengthen the country’s external position,” he said.
Recent reforms would also help attract more investments into the country, Mr. Ricafort said.
In November, President Ferdinand R. Marcos, Jr. signed into law the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy.
The law expands fiscal incentives and lowers the corporate income tax on certain foreign enterprises.
The BSP projects a BoP surplus of $2.1 billion for 2025, reminiscent of 0.4% of gross domestic product.
