The country’s overall balance of payments (BOP) position posted a surplus of US$2.0 billion in May 2024, a reversal from the US$439 million BOP deficit recorded in May 2023. The BOP surplus in May 2024 reflected inflows arising mainly from the National Government’s (NG) net foreign currency deposits with the Bangko Sentral ng Pilipinas (BSP), which include proceeds from its issuance of ROP Global Bonds, and net income from the BSP’s investments abroad.
Meanwhile, the BOP surplus in May 2024 brought the current year-to-date BOP level to US$1.6 billion surplus, lower than the US$2.9 billion surplus recorded in January-May 2023. Based on preliminary data, this cumulative BOP surplus reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, net foreign borrowings by the NG, foreign direct investments, foreign portfolio investments, and trade in services.[1]
The BOP position reflects an increase in the final gross international reserves (GIR) level to US$105.0 billion as of end-May 2024 from US$102.6 billion as of end-April 2024. The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.[2] Moreover, it is also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.[3]
[1] Based on the preliminary data from the Philippine Statistics Authority’s (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-April 2024 reached US$16.3 billion, down from the US$19.3 billion deficit posted in January-April 2023.
[2] Specifically, it ensures availability of foreign exchange to meet 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.
[3] Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
