They’ve only tallied the numbers for the first two months of the year but already, the dollar outflows from the local economy are threatening to hit the central bank’s full-year target.
In a statement, the Bangko Sentral ng Pilipinas said that the country’s overall balance-of-payments position in the January-February 2018 period had reached a deficit of $961 million compared to the $445-million deficit recorded in the same period last year.
The BOP represents the aggregate net value of dollars moving into or out of the local economy. A deficit means the Philippines spent more dollars during the period for imported goods and services compared to what it earned from exports.
The central bank had originally expected this deficit to hit $1 billion by the end of 2018 on the back of a substantial trade deficit as the country buys more goods and services from overseas to account for the Duterte administration’s infrastructure buildup program.
The BSP attributed the outflow of hard currency partly to the widening merchandise deficit in January 2018 as well as higher net outflows of foreign portfolio investments for the first two months of the year.
For February alone, the country posted a dollar flow deficit of $429 million, slightly lower than the $436-million deficit recorded in the same month last year.
This was due to the cost of its currency market intervention as authorities tried to mitigate the volatility in the exchange rate, while the government also paid off some of its foreign debt.
The central bank said that the BOP position reflected the final gross international reserve level of $80.4 billion as of end-February 2018.
At this level, the dollar reserves represent “more than ample liquidity buffer” and is equivalent to 7.9 months’ worth of imports of goods and payments of services and primary income, the central bank statement said. It is also equivalent to 5.6 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
Last week, the central bank predicted that the Philippines would continue to see large outflows of US dollars for the rest of the year.
In 2017, this balance of payments deficit hit $863 million, which was double the end-2016 figure.