BSP reports $960M BOP deficit for February

The Philippines’ balance of payments registered a $960-million deficit in February as dollar outflows from the settlement of debts to foreign creditors exceeded inflows. MARK WILSON/GETTY IMAGES/AFP

MANILA, Philippines—The country’s balance of payments (BOP) registered a $960-million deficit in February as dollar outflows from the settlement of debts to foreign creditors exceeded inflows.

The deficit in the BOP was a reversal of the $588-million surplus recorded in the same month last year, and of the $2.04-billion surplus in January this year.

The BOP is the record of a country’s commercial transactions with the rest of the world. A surplus indicates that the inflow of dollars and other foreign currencies exceed the outflows.

A deficit in the BOP causes a drop in the country’s total reserves of foreign exchange, or gross international reserves (GIR). The GIR determines a country’s ability to pay for imports and settle debts to foreign creditors.

Despite the BOP deficit posted in February, the Bangko Sentral ng Pilipinas (BSP) expects the BOP position to reverse to a surplus in the coming months.

The BSP said remittances from overseas Filipino workers, foreign portfolio investments and foreign investments in the country’s business process outsourcing (BPO) sector are expected to remain robust throughout the year.

The BSP also said the country’s GIR is expected to remain very comfortable throughout 2013.

It earlier reported that the GIR stood at $83.82 billion by the end of February. This was enough to cover nearly a year worth of imports and was 6.6 times the total outstanding and short-term debts of private and government entities in the Philippines.

According to international benchmarks, a GIR is comfortable if it is worth three to four months of a country’s import requirements, and if it is equal to its outstanding short-term debts to foreign creditors.