Analysts expressed worries over the ballooning balance of payments (BoP) deficit that reached an 11-year high $4.1 billion in January, data from the Bangko Sentral ng Pilipinas (BSP) revealed mainly as a result of debt servicing.

The latest deficit increased from $740 million recorded in the same month last year and from $2.86 billion in 2014. It also rose from the $1.5 billion gap in December last year.

“The deficit in January 2025 reflected the BSP’s net foreign exchange operations and drawdowns by the national government on its foreign currency deposits with the BSP to meet its external debt obligations,” BSP said.

The Bureau of the Treasury reported foreign debt by the national government last year grew by 11.4 percent to P5.12 trillion compared to 2023.

The BSP added that the country’s lower gross international reserves (GIR) at $103.3 billion as of end-January 2025 from $106.3 billion as of December last year further widened the shortfall.

GIR consists of foreign investments, gold, foreign exchange, reserve positions, and special drawing rights in the International Monetary Fund. .

That is twice longer than the global standard of three to four months.

“While it is not uncommon to see deficits at the start of the year due to seasonal factors such as payment of foreign debts and other obligations, the magnitude of this deficit is unusually large,” Jonathan Ravelas, financial market strategist and senior adviser at Reyes Tacandong and Co., told Daily Tribune.

He said the higher deficit last month could be “concerning” if the government fails to minimize foreign debt amid volatile foreign exchange movements.