BOP deficit widened to $569M in June

The country’s balance-of-payments (BOP) position remained in a deficit for the second straight month and widened to $569 million in June as the government paid more debt at a time that the peso slid to almost 11-year lows against the greenback, Bangko Sentral ng Pilipinas data released yesterday showed.

The June BOP deficit—which meant more dollars left the economy than came in that month—was more than nine times bigger than the $59 million posted last May and reversed the $418-million surplus recorded a year ago.

BSP Deputy Governor Diwa C. Guinigundo attributed the deficit last month “mainly to higher corporate demand for foreign exchange that affected forex operations of the BSP, coupled with debt payments by the national government.”

Towards the end of June, the peso started weakening to its lowest since September 2006.

“Although trade data are not yet available for June, we surmise that while exports continued to recover, the expanding economy pushed imports higher, particularly of capital goods and raw materials. This contributed to the recent downtrend of the peso against the dollar even as the overall macroeconomic fundamentals remained robust,” Guinigundo explained to reporters.

The dollar outflows were nonetheless “mitigated by the national government’s deposits with the BSP and inflows from the BSP’s investment income from abroad,” Guinigundo said.

As such, the BOP position at the end of the first half stayed at a deficit of $706 million, wider than end-May’s $136 million and a reversal of the $634-million surplus registered in end-June last year.

Last month, the BSP announced that it expected the BOP position to settle at a $500-million deficit by year’s end such that it would be the second consecutive year that more dollars would leave the country than flow in.

The BSP has revised its BOP projection for 2017 from the earlier $1-billion surplus projected in December last year.

In 2016, the BOP position settled at a deficit of $400 million.

The BOP is a summary of all the businesses the country does with the rest of the world. BOP data is 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. —BEN O. DE VERA