Philippines records $4.1B BoP deficit in January

The Philippines recorded its largest balance of payments (BoP) deficit in over a decade, reaching $4.1 billion in January 2025, up from December's $1.5 billion and January 2024's $740 million.

This deficit is attributed to the Bangko Sentral ng Pilipinas' (BSP) net foreign exchange operations and drawdowns by the national government on its foreign currency deposits with the BSP to meet external debt obligations, which has increased due to recent peso volatility.

The Philippine peso weakened from P57.91:$1 at the start of January to P58.3906 by month-end, reflecting the impact of these operations and a stronger dollar adding to the total debt value.

Despite the higher deficit, the central bank considers gross international reserves (GIR) of $106.3 billion as adequate for external liquidity needs and protection against speculative attacks on the peso.

Rizal Commercial Banking Corp.'s chief economist Michael Ricafort expects BOP and GIR to improve in coming months due to additional foreign commercial borrowings made by the national government, along with continued growth in remittances, business process outsourcing revenues, and tourism receipts.