PH posted lower dollar surplus in 2024, says BSP
The Philippines posted a lower dollar surplus in 2024—which also fell short of the central bank’s forecast—due to outflows from a bloated import bill and lower earnings from services exports.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the country ended 2024 with a balance of payments (BoP) surplus of $609 million, smaller than the $3.7-billion windfall recorded in 2023.
The BoP summarizes an economy’s transactions with the rest of the world during a certain period.
A surplus arises when inbound payments are greater than outbound funds during a period, while a deficit means the reverse happened.
While there was a dollar surplus last year, the outturn was way below the $3.5-billion windfall that the BSP had projected.
Data showed the BoP position tilted to a deficit of $1.5 billion in December 2024 due to outflows from the BSP’s foreign exchange operations to stem the peso’s weakness, and external debt payments of the national government.
For the entire 2024, the BSP said the dollar outflows were mainly driven by persistent trade deficits and “lower net receipts from trade in services”. But the exodus was “partly muted” by inflows from remittances, hot money, and foreign direct investments.
Improvements
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the country’s external position could still get support from traditional dollar engines, as well as from inbound flows brought by foreign loan proceeds of the Marcos administration.
That, Ricafort said, would boost the country’s buffer against external shocks.
“Going forward, any improvement in BoP could still help provide a greater cushion for the peso exchange rate, especially versus any speculative attacks, as well as help strengthen the country’s external position,” he said.
BSP data showed the dollar surplus last year translated into gross international reserves (GIR) of $106.3 billion, higher than the 2023 level of $103.8 billion but below the central bank’s forecast of $109 billion.
The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports.
Moreover, the level of buffer funds is also about 3.7 times the country’s short-term external debt based on residual maturity.
