THE country posted a balance of payments (BOP) deficit for the fourth consecutive month this year, according to data released by the Bangko Sentral ng Pilipinas (BSP).
BSP said the country’s BOP position posted a deficit of $53 million in July 2023. However, this is lower than the $1.8-billion BOP deficit recorded in the same month last year.
For this year, the BOP deficit was the largest in June at $606 million, followed by the $439 million in May 2023. The country only saw a BOP surplus twice this year—January at $3.081 billion and March, $1.267 billion.
“The BOP deficit in July 2023 reflected net outflows arising mainly from the National Government’s [NG] payments of its foreign currency debt obligations,” BSP said.
BSP data also showed that despite the deficit in July, the BOP position of the country was in surplus for the past seven months.
The data showed the cumulative BOP position of the country posted a surplus of $2.2 billion in the January to July period of the year.
This, BSP said, was a reversal from the $4.9-billion deficit recorded in the same period of 2022.
“Based on preliminary data, this development reflected mainly the improvement in the balance of trade and the sustained inflows from personal remittances, net foreign borrowings by the NG [national government], trade in services, and foreign direct investments,” BSP said.
BSP, quoting preliminary International Merchandise Trade Statistics (IMTS) data from the Philippine Statistics Authority’s (PSA), noted that the trade deficit for January-July 2023 reached $28 billion, down from the $29.8 billion deficit posted in the same period last year.
With this, the BSP said the gross international reserves (GIR) level increased to $100 billion as of end-July 2023 from $99.4 billion as of end-June 2023.
BSP noted that the country’s GIR level increased despite the BOP deficit in July 2023, mainly due to the upward revaluation adjustments in BSP gold holdings and foreign currency denominated assets.
“The impact of non-economic transactions such as revaluation adjustments is excluded in the computation of the BOP position,” the BSP said.
The latest GIR level, BSP said, represented a more-than-adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.
This, BSP said, ensures availability of foreign exchange to meet balance of payments financing needs. These needs are for the payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.
The data also showed that the GIR level is about 5.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
“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,” BSP said.