THE Philippine economy continued to bleed dollars in June this year, with its cumulative Balance of Payments (BOP) deficit nearing the $2-billion mark in the first half of the year.
The Bangko Sentral ng Pilipinas (BSP) reported on Tuesday that the country’s BOP—or the summary of the country’s transactions with the rest of the world—hit a $312-million deficit in June this year. This is a reversal of the $80-million BOP surplus of the country in June 2020.
Compared to the previous month, however, the June BOP deficit is lower, as May’s shortfall came at $1.397 billion.
The BoP is usually considered as an important economic indicator in an economy as it shows the level of earnings or expenses of the Philippines with its transactions with the world.
A deficit means that the country had more dollar expenditures than its dollar earnings during the period.
According to the Central Bank, the country’s BOP deficit in June this year reflected mainly the outflows arising from the foreign currency withdrawals of the national government (NG) from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures.
The BSP added that the deficit could have been larger, if not partly offset by the inflows from the BSP’s income from its investments abroad.
For the first half of the year, the country’s BOP deficit hit $1.94 billion, reversing the $4.1-billion surplus seen in the January-to-June period in 2020.
“Based on preliminary data, this cumulative BOP deficit was partly attributed to a wider merchandise trade deficit,” the BSP said.
Last month, the BSP said they expect the country’s BOP to hit a surplus of $7.1 billion by the end of the year. This means the country must incur an average surplus in BOP of $1.5 billion for the next six months.
The only time that the country incurred a surplus in 2021 so far is in April, hitting a $2.6-billion surplus.
Despite the optimism on the recovery of the country’s BOP, the BSP also earlier said the threat of resurgence of Covid-19 cases, the emergence of new variants of the virus and the risk of slower-than-expected vaccine deployment amid supply issues, could “cast a shadow” on the projected recovery path of the BOP.
For 2022, the BSP projects overall BOP surplus to settle lower at $2.7 billion, driven mainly by the anticipated narrower current account surplus for the year.