2022 BOP deficit at $7.26B, widest gap in 52 years

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THE Philippines ended 2022 with its widest overall balance of payments (BOP) deficit in over five decades, according to data released by the Bangko Sentral ng Pilipinas (BSP).

On Thursday, the BSP said the country’s BOP deficit reached $7.263 billion, the widest since 1970. Prior to 2022, the highest BOP deficit in the past 52 years was recorded at $3.363 billion in 1997.

Last year’s BOP deficit was also a reversal from the $1.345-billion surplus recorded in 2021. The last time the country had a full-year BOP deficit was in 2018, when it reached $2.306 billion.

“Based on preliminary data, this cumulative BOP deficit was due to the widening trade in goods deficit as goods imports continued to surpass goods exports on the back of the increase in international commodity prices and resumption in domestic economic activities,” BSP explained.

In December, the country’s overall BOP position posted a surplus of $612 million in December 2022—lower than the $991-million surplus recorded in the same month in 2021.

The surplus in December was only the third time in 2022 when the country recorded a BOP surplus.

“The BOP surplus in December 2022 reflected inflows arising mainly from the BSP net foreign exchange operations and net income from its investments abroad,” BSP said.

With the latest BOP data, BSP said the gross international reserves (GIR) level increased to $96.1 billion as of end-December 2022 from $95.1 billion as of end-November 2022.

The latest GIR level represents a more-than-adequate external liquidity buffer equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income, officials said.

Moreover, it is also about 5.9 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.

Based on preliminary data from the Philippine Statistics Authority’s (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-November 2022 reached $53.7 billion, up from the $37.1-billion deficit posted in the same period last year.

Image credits: Patrick Roque via Wikimedia Commons CC BY-SA 4.0