THE PHILIPPINES’ balance of payments (BoP) position remained in a deficit for a fifth straight month in August, mainly due to the National Government’s foreign debt payments, the central bank said on Monday.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed the country’s BoP deficit stood at $572 million in August, a turnaround from the $1-billion surplus recorded in the same month last year.
Still, this was the lowest deficit posted in four months or since the $415 million seen in April. The August BoP gap was also lower than the $1.819-billion deficit recorded in July.
The BoP measures the country’s transactions with the rest of the world at a given time. A deficit means more funds fled the economy than what went in, while a surplus shows that more money entered the Philippines.
“The BoP deficit in August 2022 reflected outflows arising mainly from the National Government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the central bank said in a statement.
For the first eight months of the year, the country’s BoP deficit widened to $5.492 billion from the $253 million seen in the same period in 2021.
The BSP expects the country’s BoP position to end the year at an $8.4-billion deficit equivalent to -2% of gross domestic product amid weaker global demand. In 2021, the Philippines posted a BoP surplus of $1.345 billion.
“Based on preliminary data, this cumulative BoP deficit reflected the widening trade in goods deficit,” the BSP said.
The Philippines’ merchandise trade deficit hit a record $5.843 billion in June amid rising imports, bringing the first-half trade balance to a $29.793-billion gap, ballooning from the $17.953 billion seen in the comparable year-ago period.
The central bank said the eight-month BoP position reflects the final gross international reserves level of $97.4 billion at end-August, decreasing by 2.4% from $99.8 billion as of July.
“The narrower BoP deficit in recent months may have to do with some recovery in the local financial markets, especially the stock and bond markets, from their lows in June 2022, as well as the sharp decline in global oil and other global commodities that could help reduce the country’s trade deficit,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
He said the continued inflow of remittances amid increased spending due to the reopening of schools and the sustained growth in business process outsourcing receipts also supported the country’s BoP position.
“However, from January-August 2022, the significantly wider BoP deficit… may be largely brought about by the significantly wider trade deficits as imports have been bloated by elevated global commodity prices earlier this year, largely attributed to the Russia-Ukraine war as well as the further reopening of the economy towards greater normalcy that also led to some pickup in imports,” Mr. Ricafort said.
He said the continued decline in the prices of oil and other commodities would help narrow the country’s trade in goods deficit. The seasonal increase in remittances during the holidays could also help make up for this gap, Mr. Ricafort added. — Keisha B. Ta-asan