The country’s balance of payments (BoP), which last stood as a surplus in 2015, stood as a deficit in the first eight months to $2.44 billion, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.
This was a 75.5 percent deterioration from the year-ago deficit of only $1.39 billion as the $314 billion Philippine economy generated far more foreign-currency expenses than it was earning from trade and transfers during the period.
In August this year alone, however, the BoP stood as a surplus reaching $1.27 billion representing a turnaround from deficit of $455 billion in July.
“The country’s overall BoP position yielded a surplus of $1.27 billion in August 2018, a reversal from the $7 million deficit recorded in the same month last year. Inflows in August 2018 stemmed mainly from net foreign currency deposits of the national government (NG) and income from the BSP’s investments abroad during the month. These were partially offset, however, by the payments made by the NG for its foreign exchange obligations and foreign exchange operations of the BSP during the month in review,” the BSP reported.
It traced the widening cumulative BoP shortfall in part to “the widening merchandise trade deficit (based on the Philippine Statistics Authority’s preliminary data) for the first seven months of the year that was brought about by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion.”
The BSP also said while the imbalance has widened, the BoP position is at that point where the country’s foreign currency reserves or the gross international reserves (GIR) is more than ample to meet maturing obligations.
“The BoP position is consistent with the final GIR level of $77.93 billion as of end-August 2018. At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 7.1 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 6.4 times the country’s short-term external debt based on original maturity and 4.4 times based on residual maturity,” it said.