GOVERNMENT debt payments led to the Philippines starting the year with a balance of payments (BoP) deficit of $740 million in January, the Bangko Sentral ng Pilipinas (BSP) reported late on Monday

The tally of the country's transactions with the rest of the world was a reversal from the $3.1-billion and $642-million surpluses recorded a year earlier and in December, central bank data showed.

"The BoP deficit in January 2024 reflected outflows arising mainly from the national government's payments of its foreign currency debt obligations," the BSP said in a statement.

The deficit also reflected a dip in the country's gross international reserves (GIR), which hit $103.3 billion as of end-January from $103.8 billion a month earlier.

The latest GIR level still represents "a more than adequate external liquidity buffer equivalent to 7.7 months' worth of imports of goods and payments of services and primary income," the BSP said.

It was also equivalent to about 6.0 times the country's short-term external debt based on original maturity and 3.9 times based on residual maturity, it added.

Short-term external debt based on residual maturity refers to debt with an original maturity of one year or less, plus principal payments on private and public sector medium- and long-term loans due within the next 12 months.

"[This] 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," the BSP said.

Asked to comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that a continued trade deficit had factored into the BoP shortfall.

"For the coming months, the BoP data could improve, thereby could also lead to better gross international reserves data," he added, noting continued growth in overseas Filipino workers remittances, outsourcing revenues, tourism receipts and other structural US dollar inflows.

The Philippines recorded a BoP surplus of $3.7 billion last year, well over the central bank's $1.1-billion estimate and marking a significant turnaround from 2022's $7.3-billion deficit

For 2024, the BSP's policymaking Monetary Board expects the country to post a $400-million BoP surplus.