BOP swung to $415-M deficit in April

The Philippines’ balance of payments (BOP) swung to a deficit of $415 million in April as the country’s dollar stash was reduced by repayments for foreign debts.

The latest Bangko Sentral ng Pilipinas (BSP) data showed that April’s BOP deficit reversed the $2.61-billion and $754-million surpluses recorded a year ago and a month ago, respectively.

In a statement, the BSP attributed last month’s BOP deficit to “outflows mainly from the national government’s foreign currency withdrawals from its deposits with the BSP as the national government settled its foreign currency debt obligations and paid for various expenditures.”

In a report, Rizal Commercial Banking Corp. chief economist Michael Ricafort also pointed to the prevailing wider goods trade deficit due a surge in imports partly bloated by expensive oil paid in dollars.

The BSP figures nonetheless showed that the BOP position from January to April remained in positive territory—a four-month surplus worth $79 million.

“Based on preliminary data, the cumulative BOP surplus reflected inflows that stemmed mainly from personal remittances, net foreign borrowings by the national government, and foreign direct investments,” the BSP said, referring to the country’s perennial top dollar earners.

Dollar reserves

In contrast, the BOP position in end-April 2021 stood at a deficit of $231 million.

The BSP noted that the Philippines’ gross international reserves (GIR) level dropped to a revised $105.4 billion as of April from $107.31 billion on March. The central bank earlier this month also primarily attributed the lower dollar reserves to foreign debt repayments.

“Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 9.3 months’ worth of imports of goods and payments of services and primary income. Moreover, it is also about 6.7 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity,” the BSP said.

The Philippines ended 2021 with a full-year BOP surplus amounting to $1.34 billion, down from the record $16.02 billion in 2020 when imports paid in dollars slid due to weak domestic consumption as a result of the pandemic-induced recession and the most stringent lockdowns imposed at the onset of the COVID-19 crisis.