BOP surplus hit $3.1-B in February

The country registered a $3.1-billion surplus from its global financial transactions, or balance of payments, last month, reversing the $196-million deficit in February 2024, due to positive economic outlooks from global institutions.

Data from the Bangko Sentral ng Pilipinas (BSP) show that the latest level was the highest in five months, following the $3.086-billion surplus in September 2024. The February level was also a reversal from the $4.078-billion deficit in the prior month.

Cumulatively, as of February 2025, the country posted a deficit of $992 million, slightly higher than the $936 million deficit reported in the same month two years ago. The BSP said this reflected a wider trade in goods deficit and net outflows from foreign portfolio investments.

In a statement on Wednesday, the BSP said the surplus in February alone reflected the proceeds from the sale of the $3.29-billion global bonds issued by the national government in January. The transaction for the global bonds was settled on February 4.

The fixed-rate global bonds consisted of 10-year and 25-year US bonds worth $2.25 billion and 7-year Euro bonds worth $1 billion, according to the Bureau of the Treasury (BTr).

The BTr said the government secured cost-efficient rates, lower than the initial price guidance (IPG).

For example, the 25-year US sustainability bond was priced at 5.900 percent, or 20 basis points (bps) tighter than the IPG.

Meanwhile, the Euro sustainability bond was priced 125 bps higher than the mid-swaps rate, reflecting a 35 bps tightening from the IPG.

"The success of this offering underscores our ability to seize favorable market conditions efficiently," Department of Finance Secretary Ralph Recto said.

"This is a reflection of the trust and confidence of investors in the leadership and policies of the Marcos Jr. administration, as recognized by the market and further reinforced by the country’s improving credit rating trajectory," he added.

Recto said this meant investment grades for the bonds at Baa2 from Moody’s, BBB+ from Standard & Poor’s, and BBB from Fitch.

To reduce debt payments this year, Recto said the government will mostly borrow from domestic sources, with an 80 percent share compared to 20 percent for foreign loans.

After the global bonds, Recto said the government will keep foreign borrowings to a "very minimal" level ranging from $250 to $500 million.

"I think we've got it covered already for the year," he said.

Rizal Commercial Banking Corporation chief economist Michael Ricafort said the country's gold reserves, partially sold by the BSP, contributed to the surplus.

"Gold prices posted new record highs at $2,956 per ounce last month," he said.

Ricafort added that the country saw gains from foreign investments as markets expected economic growth in the US a few weeks after its president, Donald Trump, was inaugurated.

Ricafort said foreign investors will continue to take advantage of possibly higher consumption of goods and services in the country due to easing inflation and interest rates.

He said the Bangko Sentral ng Pilipinas might cut its benchmark lending rates by a total of 75 basis points this year.

However, Ricafort said lower returns on investments are possible if US President Donald Trump intensifies protectionist policies in the hopes of boosting the US economy.

"Higher tariffs on US imports from China and other countries could lead to higher wage inflation, wider budget deficits, or economic stimulus. All of which could lead to higher US inflation and fundamentally reduce future Federal Reserve rate cuts," the economist said.

However, Ricafort said continued inflows of remittances from overseas Filipino workers (OFWs), hiring of Filipinos for business process outsourcing (BPO), and foreign tourist arrivals should keep the Philippine economy robust.

In January, OFW remittances grew by 2.9 percent to $3.24 billion compared to the same month in 2023.

IT and Business Process Association of the Philippines president Jack Madrid said the local BPO industry also grew its revenues by 7 percent to $38 billion last year compared to 2023. Globally, he said the average growth stood at 3.5 percent.