The deteriorating balance was similarly traced to the debt service activities of the National Government

The balance of payments (BoP), or what is left after deducting the country’s foreign-currency expenses from its foreign currency earnings, stood as a deficit aggregating $1.18 billion in June and nearly twice as wide as the shortfall in May.

According to the Bangko Sentral ng Pilipinas, the deficit in May totaled only $583 million, but enough shortfall to widen the cumulative imbalance 361 percent year-on-year to $3.26 billion.

Data show the Philippines posting a net outflow of foreign currency since January this year when the imbalance stood at $531 million and has not reversed since then.

In February the imbalance moderated to only $429 million and further to $266 million only to widen again the following April to $270 million. By May, the imbalance widened to $583 million before ramping up to $1.18 billion in June.

The BSP traced the escaping foreign currency in June in part to their foreign exchange (forex) operations when they bought and sold dollars as part of their role to stabilize the exchange rate.

The deteriorating balance was similarly traced to the debt service activities of the National Government as it pays down maturing obligations during the month.

“These were partially offset, however, by net foreign currency deposits of the NG and income from the BSP’s investments abroad during the month,” the central bank said.

It also said the cumulative six-month BoP deficit of $3.26 billion from only $706 million a year earlier resulted in part from the widening merchandeise trade based on data from the Philippines Statistics Authority (PSA) showing a sustained rise in imports of raw materials and capital goods to support domestic expansion.

Data also show the widening trade imbalance aggregating $3.7 billion in May from only $2.51 billion a year ago. This was the widest trade gap since December last year as exports fell even as imports surged forward.

Exports during the period fell 3.8 percent to $5.76 billion following an adjustment in export data to 4.9 percent in April. This developed even as imports surged ahead by 11.4 percent to $9.46 billion following a recast imports growth from 23.1 percent in April.

“The reported BoP position is consistent with the final gross international reserve (GIR) level of $77.53 billion as of end-June 2018. At this level, the GIR represents more than ample liquidity buffer and is equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 6.2 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity,” the BSP said.

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