THE COUNTRY’S balance of payments (BoP) deficit widened in November as the government made more repayments on foreign debt, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
Data from the central bank showed the BoP position widened to a $2.276-billion deficit in November from the $216-million gap a year ago. It also more than tripled from the $724-million deficit in October.
November also marked the widest deficit in 26 months or since the $2.339-billion shortfall recorded in September 2022.
The BoP measures the country’s transactions with the rest of the world at a given time. A deficit means more funds left the economy than what went in, while a surplus shows that more money entered the Philippines.
“The BoP deficit in November 2024 reflected 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, and the BSP’s net foreign exchange operations,” it said.
Earlier data from the BSP showed that the Philippines’ external debt service burden declined by 3.8% to $8.68 billion in the January-to-August period.
Outstanding external debt hit a record $130.182 billion at the end of June. This brought the external debt-to-gross domestic product (GDP) ratio to 28.9% at the end of the second quarter.
In the first 11 months, the BoP stood at a surplus of $2.117 billion, 30% lower than the $3.03-billion surfeit in the same period a year earlier.
“Based on preliminary data, the decline in the cumulative BoP surplus was due to lower net receipts from trade in services and net foreign borrowings by the NG,” the central bank said.
The country’s trade deficit widened by 36.8% year on year to $5.8 billion in October, its widest trade gap in 26 months or since August 2022, data from the local statistics authority showed.
For the first 10 months, the trade deficit widened by 3.6% to $45.22 billion from the $43.64-billion gap a year ago.
“However, this decline was partly muted by the continued net inflows from personal remittances as well as net foreign portfolio and direct investments,” the BSP added.
In the first 10 months, cash remittances grew by 3% to $28.3 billion from $27.49 billion a year prior.
In the same period, BSP-registered foreign investments yielded a net inflow of $2.49 billion, a turnaround from the $715.43-million outflow in 2023.
Meanwhile, foreign direct investment (FDI) net inflows rose by 3.8% to $6.66 billion in the first nine months from $6.42 billion a year ago.
At its end-November position, the BoP reflected a final gross international reserve (GIR) level of $108.5 billion, down by 2.3% from the $111.1 billion as of end-October.
The dollar reserves were enough to cover 4.3 times the country’s short-term external debt based on residual maturity.
It is also equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.
An ample level of foreign exchange buffers safeguards an economy from market volatility and is an assurance of the country’s capability to pay debts in the event of an economic downturn.
This year, the BSP expects the country’s BoP position to end at a $2.3-billion surplus, equivalent to 0.5% of GDP.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the depreciation of the peso impacted on the net payment of foreign debt maturities.
The peso fell to the record-low P59-per-dollar level twice in November.
“For the coming months, the country’s GIR and BoP could still be supported by the continued growth in the country’s structural inflows from OFW (overseas Filipino worker) remittances, BPO revenues, exports, and relatively fast recovery in foreign tourism revenues,” Mr. Ricafort said.
He said further fundraising activities such as global bond issuances could also boost the BoP position.
Finance Secretary Ralph G. Recto has said they are looking to issue dollar- and euro-denominated bonds in the first half of 2025.
“Thus, still relatively high GIR at $108.5 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings,” Mr. Ricafort said. — Luisa Maria Jacinta C. Jocson
