BOP deficit narrowed to $7 million in August

Bangko Sentral ng Pilipinas Gov. Nestor Espenilla Jr. PDI FILE PHOTO / JOSEPH AGCAOILI

The country’s balance of payments (BOP) position in August remained at a deficit, although at a narrower $7 million, amid the “ghost” month in stocks trading.

The latest Bangko Sentral ng Pilipinas (BSP) data released Tuesday night showed that the BOP deficit last month, which meant that more dollars left the country than entered the economy, was lower than the $678 million in July, albeit a reversal of the $682-million surplus in August last year.

“Outflows during the month were largely offset by the national government’s net foreign currency deposits and the BSP’s income from its investments abroad,” BSP Governor Nestor A. Espenilla Jr. explained in a statement.

“The reduced deficit also reflected the thin trading of portfolio investments during the ‘ghost’ month of August,” Espenilla added.

At the end of the first eight months, the BOP deficit further widened to a cumulative $1.391 billion, reversing the $1.531-billion surplus as of end-August last year.

“The cumulative deficit was largely accounted for by portfolio investments, which, for the period January to August this year, reversed to net outflows of $319 million from $2.1-billion net inflows during the same period last year on the back of domestic and global developments including the US Federal Reserve interest rate hike, global terrorism concerns, and closure orders for some mining companies in the country,” Espenilla said.

The BSP chief nonetheless noted that “the Philippine Statistics Authority (PSA)-based trade balance showed steady improvement as it registered a narrower deficit of $14.7 billion during the January to July period this year compared to the $15.4-billion shortfall in the same period a year ago.”

“For the same period, the growth of merchandise exports at 13.8 percent outpaced that of merchandise imports at 7.9 percent. It may also be noted that the trade deficit also reflected increased percent share to total imports of raw materials and intermediate goods at 38.6 percent, and capital goods imports at 32.4 percent, indicating continued expansion in domestic economic activity,” Espenilla said, citing the latest PSA data.

The current account, a component of the BOP, was expected to swing to a deficit of $600 million this year from a $600-million surplus last year as imports growth outpace that of exports.

BSP officials had said the surge in imports of capital goods was supporting the growing economy as well as the government’s plan to ramp up infrastructure investments.

The BSP had announced it expects the BOP position to settle at a deficit of $500 million, such that it will the second straight year that more dollars would leave the country than come in.

In June, the BSP 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 $400-million deficit.

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 the rest of the world.

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 and tourism.

The country uses the dollars it earns for the importation of goods, such as food and fuel, and also for external debt payments. /jpv