BoP deficit narrows; reserves hit $102.7B

The Philippines' balance of payments (BoP) position hit a deficit of $216 million in November as the government paid off foreign debt, the Bangko Sentral ng Pilipinas (BSP) said late on Tuesday.

The result was a reversal from October's $1.5-billion surplus and was also lower than the year-earlier deficit of $756 million.

«The BoP deficit in November 2023 reflected outflows arising mainly from the national government's (NG) payments of its foreign currency debt obligations,» the BSP said in a statement.

The cumulative BoP position remained positive at a $3.0-billion surplus, also a reversal from the year-earlier deficit of $7.9 billion but down from the end-October surplus of $3.25 billion.

«Based on preliminary data, this development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the NG,» the central bank said.

«Further, net inflows from foreign direct investments contributed to the surplus, albeit lower during the covered period,» it added.

Gross international reserves (GIR), meanwhile, rose to $102.7 billion as of end-November from $101.0 billion a month earlier, the central bank also said.

This represents «a more than adequate external liquidity buffer equivalent to 7.6 months' worth of imports of goods and payments of services and primary income,» it added.

"[I]t ensures availability of foreign exchange to meet the balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans."

The GIR level was said to be also equivalent to about 6.0 times the country's short-term external debt based on original maturity and 3.7 times based on residual maturity.

Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less plus principal payments on public and private sector medium- and long-term loans falling due in the next 12 months.

Commenting on the results, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the BoP deficit shrank partly due to proceeds of foreign currency-denominated