The country’s balance of payments (BOP) reverted to a $3.1 billion surplus in February 2025 from a deficit of $4.1 billion in the preceding month, the Bangko Sentral ng Pilipinas (BSP) said yesterday.
The February surplus was also a turnaround from the $196 million deficit recorded in the year-earlier period of February 2024. It was also the biggest in five months after September 2024, when the BOP hit a surplus of $3.5 billion.
The surplus, however, failed to narrow the cumulative BOP deficit for the first two months of the year, which reached $992 million, still higher than the cumulative $936 million deficit in the same two-month period last year.
BSP Governor Eli M. Remolona Jr. said in a statement on Wednesday the BOP surplus reflected the national government’s (NG’s) net foreign currency deposits with the BSP—which included proceeds from the government’s global bonds and net income from BSP’s foreign investments.
BOP measures a country’s economic transactions with the rest of the world over a given period.
“Based on preliminary data, the year-to-date deficit reflected mainly the widening trade in goods deficit and net outflows from foreign portfolio investments, but was partially offset by net receipts from foreign borrowings by the NG and personal remittances,” Remolona said.
Preliminary data from the Philippine Statistics Authority showed the trade deficit for January 2025 reached $5.1 billion, up from the $4.4 billion deficit in January 2024.
Increased GIR
Remolona added that the improved (month-on-month) BOP position mirrored the increase in the final gross international reserves (GIR) to $107.4 billion as of February 2025, which stood higher than the $103.3 billion GIR at the end of January.
“The latest GIR level ensures availability of foreign exchange to meet the 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,” Remolona said.
This latest GIR level provides a robust external liquidity buffer, equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income, the BSP said. It is also sufficient to cover about 3.8 times the country’s short-term external debt or outstanding external debt with an original maturity of one year or less.
Underlying challenges
Jonathan Ravelas, BDO’s lead strategist, said in a Viber message that while the turnaround was significant, challenges still need to be addressed.
“It’s quite impressive to see such a significant turnaround in the balance of payments position. A $3.1 billion surplus in February 2025, compared with a $196 million deficit in February 2024, indicates a substantial improvement in the country’s economic activities,” Ravelas said.
“However, the cumulative BOP deficit of $992 million for the first two months of the year suggests that there are still underlying challenges that need to be addressed,” Ravelas noted.
He said this mixed result “highlights the importance of maintaining a balanced approach to economic policies to sustain positive trends while mitigating deficits.”
Ravelas sees the BOP registering a deficit for the whole of 2025.
Jun Neri, BPI lead economist said the BSP’s decision to keep the key rates steady during the last monetary policy stance meeting helped the BOP turnaround.
“We think it helped that the BSP did not cut rates last February. This likely attracted foreign flows into both the local bond and equity markets last month, helping, in turn, mitigate the persistent deficits in the current account,” Neri said.
He added that, for now, the Philippines is benefitting from the exodus of funds from the US.
“But this could change instantly if the US succeeds in convincing the global investor community that deregulation, spending cuts on wars, government reengineering and tax cuts, will really help the US bring down their ballooning debt and widening deficits to more sustainable levels,” Neri said.
“(The end-2025 BOP) will depend on many factors, especially what happens with US President Trump’s policies,” Neri said.
After three consecutive rate cuts totaling 75 bps in 2024, the policymaking Monetary Board decided in its February meeting to freeze its key rates, such as the BSP’s Target Reverse Repurchase (RRP) Rate, at 5.75 percent. The interest rates on the overnight deposit and lending facilities were also kept at 5.25 percent and 6.25 percent, respectively.
In making the February decision, the Monetary Board cited “economic uncertainty over global trade policies.”
Early this month, however, Remolona said the BSP continued to be in a monetary easing cycle and was on track for taking “baby steps” of 25-basis points cut at a time. The next policy meeting is scheduled for April 10.
