BOP deficit ballooned to $2.3B in September–BSP

The Philippines’ balance of payments (BOP) remained at a deficit for the ninth month in a row at $2.3 billion in September, about six-fold wider than the $412 million posted in the same month in 2021 as the national government paid its foreign debt.

According to the Bangko Sentral ng Pilipinas (BSP), the September readout was also mainly due to its net foreign exchange operations.

Also, the BOP deficit in September was four times broader than the deficit of $572 million in August.

Further, the September BOP brought the nine-month or January to September result to a deficit of $7.8 billion or close to 12 times the $665-million deficit recorded in the same period of 2021.

“Based on preliminary data, this cumulative [or nine-month] BOP deficit reflected the widening trade in goods deficit as goods imports continued to surpass goods exports on the back of the persistent surge in international commodity prices and resumption in domestic economic activities,” the BSP said.

Preliminary data from the Philippine Statistics Authority’s latest International Merchandise Trade Statistics (IMTS) report put the country’s deficit in the trade of goods at $41.81 billion—including a record monthly deficit of $6 billion in August—69 percent wider than the $24.77-billion trade deficit posted in the same period last year.

Further, the BSP said final figures for the gross international reserves as of the end of September showed $93 billion. The central bank earlier this month reported a preliminary figure of $95 billion.

This meant that $4.4 billion bled out from the BSP’s reserves that were pegged at $97.4 billion at the end of August.

Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, said the country’s import bill is expected to exceed dollar inflows in 2022—including export earnings, revenues from business process outsourcing activities, and remittances from overseas Filipinos—for the first time in at least eight years.

Citing numbers from CEIC Data, Neri said Philippine imports were expected to ring up at $140 billion this year while inflows from the three major US dollar sources would tally at just $135 billion.