The balance of payments represents the net value of all dollars flowing into and out of the economy during a given from its transactions with the rest of the world whether it be from trade, earnings from services, remittances, investments, or loans. A surplus means the country, as whole, is earning more than it is spending, and a deficit signifies the opposite.
Key highlights:
The sharp decline in the 2024 surplus was attributed to a wider trade in goods deficit and reduced foreign borrowings by the national government.
In December alone, the country registered a balance of payments deficit of $1.5 billion, a sharp reversal from the $642 million surplus posted in the same month of 2023. The December shortfall was driven by the central bank’s foreign exchange operations and the government’s drawdown of its deposits to meet debt obligations.
Despite the lower annual surplus, the BSP highlighted that net inflows from remittances, foreign portfolio investments, and direct investments helped mitigate the impact of the declining trade performance and lower borrowings.
As of the end of December, the country’s total dollar reserves stood at $106.3 billion, down from $108.5 billion a month earlier. The BSP noted that the current dollar reserve level is sufficient to cover 7.5 months’ worth of imports and remains adequate to address the country’s external obligations.
Despite the lower annual surplus, the BSP highlighted that net inflows from remittances, foreign portfolio investments, and direct investments helped mitigate the impact of the declining trade performance and lower borrowings.
As of the end of December, the country’s total dollar reserves stood at $106.3 billion, down from $108.5 billion a month earlier. The BSP noted that the current dollar reserve level is sufficient to cover 7.5 months worth of imports and remains adequate to address the country’s external obligations.
