BOP reverts to deficit

In October

MANILA, Philippines —  The country’s balance of payments (BOP) position swung to a deficit of $724 million in October, ending three straight months of surplus, as the national government settled more foreign currency debt obligations, according to the Bangko Sentral ng Pilipinas (BSP).

The latest BOP shortfall was a reversal of the $3.53 billion surplus in September and the $1.51 billion surfeit a year ago.

“The BOP deficit in October reflected the national government’s net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the central bank said.

The BOP is the difference in total values between payments into and out of the country over a period.

A deficit means more dollars flowed out from the country to pay for the importation of more goods, services and capital than what flowed in from exports, remittances from overseas Filipino workers (OFWs), business process outsourcing (BPO) earnings and tourism receipts.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said last month’s BOP shortfall came amid increased market volatility largely brought about by geopolitical risks.

Markets also priced in the possibility of a Trump presidency in the latter part of October before the November elections in the US, Ricafort said.

Despite the deficit in October, the cumulative BOP position registered a surplus of $4.4 billion in the first 10 months, 35 percent higher than the $3.2 billion surplus recorded in the same period in 2023.

“The surplus reflected in part the continued net inflows from personal remittances, trade in services and net foreign borrowings by the national government,” the BSP said.

“Furthermore, net foreign direct and portfolio investments contributed to the BOP surplus,” it said.

The BSP said gross international reserves (GIR) went down by 1.4 percent to $111.1 billion as of end-October from $112.7 billion as of end-September.

The buffer represents a more than adequate external liquidity buffer equivalent to eight months’ worth of imports of goods and payments of services and primary income.

The GIR level is also about 4.4 times the country’s short-term external debt based on residual maturity.

The BSP expects the BOP position to hit a surplus of $2.3 billion (0.5 percent of gross domestic product) this year and $1.7 billion (0.3 percent of GDP) in 2025.