BoP returns to surplus in August
The country’s balance of payments (BoP) reverted to a surplus in August, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday, but the year-to-date tally remained in deficit.
August’s $1.272-billion result reversed the $455-million and $7-million shortfalls recorded in July and a year earlier.
It was also the largest since January 2013, when the payments position stood at a surplus of $2.044 billion.
“Inflows in August 2018 stemmed mainly from net foreign currency deposits of the national government and income from the BSP’s investments abroad during the month,” the central bank said in a statement.
These were partially offset, however, by the government’s payments of maturing foreign exchange obligations and the BSP’s foreign exchange operations.
The year-to-date tally was a deficit of $2.440 billion, wider than the $1.391 billion recorded in the same period last year. It was also higher than Bangko Sentral’s $1.5-billion forecast.
“The higher cumulative BoP deficit for the period may be attributed partly 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 central bank noted.
The trade deficit widened by 72.3 percent as of end-July to $22.490 billion, from $13.055 billion a year earlier, based on latest available data.
The Philippines ended 2017 with a BoP deficit of $863 million, narrower than the revised $1.038 billion posted in 2016.
The central bank added that last month’s payments balance position was consistent with the country’s final gross international reserves (GIR) 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 reported.
The GIR 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, the BSP added.
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