Philippines Records Significant Balance of Payments Deficit in January

The Philippines experienced a substantial balance of payments deficit amounting to USD4.1 billion in January, according to the Bangko Sentral ng Pilipinas (BSP). This figure marks a significant increase from the USD740 million deficit reported in January of the previous year. The balance of payments is a comprehensive record of a nation’s economic interactions with other countries over a set period, which can result in a surplus, deficit, or balance. The BSP attributed the January 2025 deficit to its net foreign exchange activities and the national government’s withdrawals from its foreign currency reserves held at the BSP, aimed at fulfilling external debt obligations. Additionally, the BSP reported a decline in the gross international reserves (GIR) to USD103.3 billion by the end of January 2025, down from USD106.3 billion at the end of 2024. Despite this drop, the BSP reassured that the current GIR level still provides a robust external liquidity buffer, sufficient to cover 7.3 months of imports and payments for services and primary income. The reserves are also 3.7 times the country’s short-term external debt, based on residual maturity.