BOP target for ’21 missed; surplus settles at $1.35B

The balance of currency flows in the Philippines settled at a surplus of $1.35 billion in 2021, short of the $1.6-billion target and down from $16 billion in 2020, amid a widening trade deficit.

In December alone, the balance of payments (BOP)—the sum up of the domestic economy’s transactions with the rest of the world—was recorded at a surplus of $991 million, which was less than one-fourth of the $4.2 billion chalked up in the same month of 2020.

This, the Bangko Sentral ng Pilipinas (BSP) said in a statement, reflected inflows including the BSP’s income from its investments abroad, personal remittances, trade in services, foreign direct investments and net foreign borrowings by the national government.

Even then, these factors were dampened by a wider trade deficit—imported goods were significantly outweighing exports.

Preliminary data from the Philippine Statistics Authority show that the value of goods imported to the Philippines surpassed exports by a total of $37.92 billion in the 11 months from January to November 2021.

This was 72 percent more than the trade deficit of $22.15 billion posted in the same period of 2020.

The BSP said the Philippines’ overall BOP position in 2021 also reflected an increase in the final gross international reserves (GIR) level, which reached $108.79 billion at end-December from $107.72 billion at end-November.

The latest GIR level represents a more than adequate external liquidity buffer equivalent to 10.3 months’ worth of imports of goods and payments of services and primary income,” the regulator said.

“Specifically, it ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” the BSP said.

Further, the stock of foreign currency reserve assets was also about 8.7 times the country’s short-term external debt based on original maturity and 5.8 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.