BOP deficit widens to $994M in 1st quarter

The country posted a balance-of-payments (BOP) deficit of $550 million in March, the sixth straight month that the amount of dollars that left the economy was more than what came in.

An economist warned that a continuous BOP deficit coupled with a current-account deficit might negatively impact on the country’s investment-grade credit ratings.

The latest Bangko Sentral ng Pilipinas data released yesterday showed that last month’s BOP deficit was the biggest in four months, exceeding February’s $436 million, January’s $9 million and December 2016’s $214 million.

The deficit in March also reversed the $854-million surplus during the same month last year.

At the end of the first quarter, the deficit widened to $994 million from the $210-billion deficit in end-March last year.

“The country’s external payments position is under some stress. This is the second straight quarter that the country incurred a BOP deficit. The likelihood of another deficit of the current account is high. If this is the case for the first quarter, then this would represent also a second straight quarter of a current-account deficit. We may need to revisit our base case of a current-account surplus this year,” ING Bank Manila senior economist Joey Cuyegkeng said.

For 2017, the BSP targets a BOP surplus of $1 billion.

The BOP is a summary of all the businesses the country does with the rest of the world. BOP data are tracked closely to ensure that the supply of dollars in the economy remains ample to allow the government as well as businesses to transact with other countries.

Sources of dollar income for the country include remittances from Filipinos overseas, sales from exports of goods and services as well as foreign investments and revenues from industries such as business process outsourcing (BPO) and tourism.