Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
MANILA, Philippines—More dollars left than entered the Philippines last month as the national government’s foreign debt payments outweighed earnings from overseas, according to the Philippine central bank.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the country’s overall balance of payments position posted a deficit of $412 million in September 2021, marking a reversal from the $2.1-billion surplus recorded in the same month in 2020.
“The deficit in September 2021 reflected outflows arising mainly from the debt service payment of the national government’s foreign currency debt obligations,” the BSP said.
The balance of payments account represents the net amount of dollars that flowed into or out of the economy during a particular period vis-a-vis the rest of the world due to, among others, trade in goods, services, and flow of capital. A surplus means a country made more than it spent for that period, while a deficit means the opposite.
From January to September 2021, the cumulative balance of payments position registered a deficit of $665 million, which was also a reversal from the $6.88-billion surplus recorded in the same period in 2020.
“Based on preliminary data, this cumulative balance of payments deficit was partly attributed to a wider merchandise trade deficit and lower net foreign borrowings by the national government compared to the same period last year,” the agency added.
This was after the Philippine Statistics Authority reported that the trade balance for January-August 2021 reached $25.25 billion, up from the $15.69 billion deficit posted in the same period in 2020.
The BSP said the country’s dollar flow position reflected a decrease in the final gross international reserves level to $106.6 billion as of end-September 2021 from $107.96 billion as of end-August 2021.
“The latest dollar reserve level represents a more than adequate external liquidity buffer equivalent to 10.7 months’ worth of imports of goods and payments of services and primary income,” it said.
The country’s dollar reserves ensure the availability of foreign exchange to meet balance of payments financing needs, like for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.
It added that this amount is also about 7.7 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity.
Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.