BUSINESS
Advocates Philippines
Bigger BOP Deficit In January 2025: What It Means For The Economy
Photo credit: BSP
The Philippines started 2025 with a larger balance of payments (BOP) deficit, hitting $4.1 billion in January—a significant jump from the $740 million deficit recorded in the same month last year.
So, what happened? According to the Bangko Sentral ng Pilipinas (BSP), this wider gap mainly stemmed from two factors: the central bank’s foreign exchange operations and the national government’s withdrawals from its foreign currency reserves to cover debt payments.
Impact on the Country’s Dollar Reserves
Because of this, the country’s gross international reserves (GIR)—basically our financial cushion against external shocks—dipped to $103.3 billion by the end of January 2025, compared to $106.3 billion at the close of 2024.
Despite the decline, the BSP reassures that the current GIR level is still enough to cover 7.3 months’ worth of imports and 3.7 times the country’s short-term external debt based on residual maturity.
Why This Matters
A higher BOP deficit means the country spent more foreign currency than it earned—which could put pressure on the peso, inflation, and overall economic stability. Moving forward, analysts will keep an eye on how the government and BSP manage external obligations and foreign exchange flows to maintain a healthy financial position.
So, what happened? According to the Bangko Sentral ng Pilipinas (BSP), this wider gap mainly stemmed from two factors: the central bank’s foreign exchange operations and the national government’s withdrawals from its foreign currency reserves to cover debt payments.
Impact on the Country’s Dollar Reserves
Because of this, the country’s gross international reserves (GIR)—basically our financial cushion against external shocks—dipped to $103.3 billion by the end of January 2025, compared to $106.3 billion at the close of 2024.
Despite the decline, the BSP reassures that the current GIR level is still enough to cover 7.3 months’ worth of imports and 3.7 times the country’s short-term external debt based on residual maturity.
Why This Matters
A higher BOP deficit means the country spent more foreign currency than it earned—which could put pressure on the peso, inflation, and overall economic stability. Moving forward, analysts will keep an eye on how the government and BSP manage external obligations and foreign exchange flows to maintain a healthy financial position.
Feb 20, 2025
We are dedicated storytellers with a passion for bringing your brand to life. Our services range from news and media features to brand promotion and collaborations.
Interested? Visit our
Contact Us page for more information. To learn more about what we offer, check out our latest article on services and opportunities.
