BSP recorded more dollar outflows from PH in June

Further fallout from the Russia-Ukraine war could contribute to a widening balance of payments (BOP) deficit in the Philippines, which was pegged at $1.57 billion in June.

The Bangko Sentral ng Pilipinas (BSP) said on Wednesday the June BOP deficit ballooned from $312 million in the same month of 2021, but narrowed slightly from $1.6 billion in May.

This was the third straight month that the Philippine BOP position pointed to a deficit, since the $415 million recorded in April.

The BOP deficit in June 2022 reflected outflows arising mainly from the national government’s payments of its foreign currency debt obligations.

In the first semester this year, the BOP rested at a deficit of $3.1 billion, also wider than the $1.9 billion that was posted in the comparative period of 2021.

“Based on preliminary data, this cumulative [six-month] BOP deficit reflected the widening trade in goods deficit,” the BSP said.

Also, the central bank said its gross international reserves (GIR) level was now at $100.9 billion as of the end of June 2022, which was even lower than the $101.98 billion that was announced earlier this month.

Consisting of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund and special drawing rights, the BSP’s GIR has been declining month after month since February.

“Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.4 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

“Moreover, it is also about 7.1 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity,” it added.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the war in Ukraine — which started on Feb. 24 — could still lead to elevated imports of oil and other commodities that could, in turn, still lead to near record high trade deficits and net imports.

He said these would then lead to an even weaker peso exchange rate against the US dollar as seen in recent weeks and months.