BOP shortfall narrows to $373 million

MANILA, Philippines — The country’s balance of payments (BOP) position posted a $373-million deficit in January, extending the country’s shortfall to a third consecutive month, as early-year external payment pressures persisted.

However, the latest figure was 54.9 percent smaller than the $827-million deficit recorded in December and far lower than the $4.078-billion shortfall in January 2025, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BOP, which summarizes the country’s transactions with the rest of the world, reflects movements in trade, investments and financial flows. A deficit indicates that more foreign currency left the economy than entered during the period.

Despite the continued shortfall, the BSP said the country’s external buffer remained strong, with gross international reserves (GIR) rising to $112.6 billion as of end-January, equivalent to about 7.5 months’ worth of imports of goods and payments of services and primary income.

The reserves also covered about 4.1 times the country’s short-term external debt based on residual maturity.

The central bank said GIR, which consists of foreign-denominated securities, foreign exchange and other reserve assets including gold, helps ensure adequate dollar liquidity to meet import and debt obligations and cushion the economy from external shocks.

SM Investments Corp. group economist Robert Dan Roces said the January deficit was not unexpected, noting that early-year pressures tend to weigh on external accounts.

“The deficit largely reflects seasonally strong import payments and profit remittances at the start of the year, alongside some portfolio repositioning amid global rate uncertainty,” Roces said.

He added that the narrower gap compared with December suggests external pressures may already be easing.

Roces said the external position is likely to improve in the coming months as remittances and tourism receipts pick up, although risks remain tied to global conditions.

“In the coming months, the BOP should stabilize as remittance inflows rise and tourism receipts improve, though much will depend on oil prices, electronics exports and the direction of US rates,” he said.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the BOP remained in deficit largely because imports continued to outpace exports.

Ravelas said this reflected strong domestic demand and ongoing infrastructure spending, while global demand for Philippine exports and services such as business process outsourcing and tourism had been relatively softer.

“Looking ahead, the BOP will likely stay in the red in the near term but should stabilize as exports recover, tourism picks up and investment reforms gain traction,” Ravelas said.

“The key now is to boost export competitiveness and attract more long-term investments, rather than overreacting to the headline number,” he added.

The BSP expects the country’s BOP position to hit a deficit of $5.9 billion this year.