BOP swings to deficit in February


The settlement of the country’s foreign currency debt obligations caused the Philippines’s balance of payments (BOP) to post a deficit in February, according to the Bangko Sentral ng Pilipinas (BSP).

The BSP said the country’s overall BOP position widened to $895 million in February 2023, the widest in five months.

This was a reversal from the BOP surplus of $3.08 billion in January 2023 and was wider than the $157 million deficit posted in February 2022.

“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 BSP to settle its foreign currency debt obligations and pay for its various expenditures,” BSP said in a statement.

However, BSP said, the country’s cumulative BOP position remained at a surplus of $2.2 billion in the first two months of the year.

This was a reversal from the $259 million cumulative deficit recorded in the January to February period in 2022.

“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 BSP said.

BSP also said the country’s gross international reserves (GIR) level fell to $98.2 billion as of end-February from $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.

BSP said this means there is available foreign exchange to meet the country’s balance of payments financing needs.

These needs include payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.

“For the coming months, BOP data could still be supported by the continued growth in the country’s structural US dollar inflows such as OFW remittances, BPO revenues, exports, foreign investments/FDIs, foreign tourism receipts, among others,” Rizal Commercial Banking Corp. Chief Economist Michael Ricafort said.

“The proposed $3 billion US dollar or euro-denominated retail bonds to be offered by the national government in the second quarter of 2023, with a tenor of at least 5 years, would also be added to the country’s BOP and gross international reserves by then,” he added.

The data also showed that about 5.9 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.

BSP said 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.

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