THE country’s overall balance of payments (BOP) deficit was at its widest in the past three months, according to data released by the Bangko Sentral ng Pilipinas (BSP).
The BSP said the deficit reached $439 million in May 2023, the largest since February 2023 when the deficit reached $895 million. The deficit, however, was still narrower than the $1.6 billion posted in May 2022.
“The BOP deficit in May 2023 reflected outflows arising mainly from the National Government’s [NG] net 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.
Despite the deficit in May 2023, the country’s overall BOP position in the past five months remained in surplus at $2.866 billion in 2023.
BSP said this level is a reversal from the $1.5-billion deficit recorded in the same period last year.
“Based on preliminary data, this cumulative BOP surplus was partly attributed to net inflows from personal remittances, net foreign borrowings by the NG, trade in services, and foreign direct investments,” BSP said.
Given the latest data, the country’s gross international reserves (GIR) level decreased to $100.6 billion as of end-May 2023 from $101.8 billion as of end-April 2023.
The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.
BSP said this ensures availability of foreign exchange to meet 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.
Moreover, data showed this is about 5.8 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
BSP said short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
Meanwhile, Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said the BOP is expected to be supported by Overseas Filipino Worker inflows and Business Process Outsourcing revenues in the coming months.
Ricafort added that foreign investments/FDIs, exports, and foreign tourism receipts are also expected to buoy the country’s cash flow statement with the rest of the world.
He added that the further narrowing of the country’s trade deficit is also due to the recent decline in the world prices of crude oil and other global commodities imported by the country.
The proposed $2-billion US dollar-denominated retail bonds to be offered by the national government in the third quarter of 2023 with a tenor of at least five years, would also be added to the country’s BOP and gross international reserves (GIR).
May BOP deficit widest in 3 months
Source: News Paper Radio
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