BOP deficit narrowed to $53M in July, says BSP

Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)

The Philippines’ balance of transactions with the rest of the world remained tilted to a deficit for the fourth month in a row in July, but the lowest for that period at $53 million, according to the Bangko Sentral ng Pilipinas (BSP).

The latest balance of payments (BOP) deficit readout is much lower than the $1.6 billion in July 2022 as well as the $606 million last June.

“The BOP deficit in July 2023 reflected net outflows arising mainly from the national government’s payments of its foreign currency debt obligations,” the BSP said in a statement.

“Notwithstanding the deficit in July, the cumulative BOP position registered a surplus of $2.2 billion in the first seven months of the year,” the BSP said.

The January-July result represented a reversal from the $4.9-billion deficit recorded in the same period of 2022.

“Based on preliminary data, this development reflected mainly the improvement in the balance of trade and the sustained inflows from personal remittances, net foreign borrowings by the national government, trade in services and foreign direct investments,” the BSP added.

Also, the central bank said the gross international reserves (GIR) returned to the three-digit-mark at $100 billion at the end of July.

Adequate buffer

This was more than the preliminary figure of $99.7 billion reported earlier this month, and meant an increase of $600 million from the $99.4 billion recorded at the end of June.

The BSP said the latest GIR level continues to represent a more than adequate external liquidity buffer that is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

The GIR is also about 5.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the BOP position continued to show a surplus since the start of the year even with a four-month run of deficits thanks largely to the issuance of global bonds and inflows of official development assistance and other multilateral grants.

Ricafort said other factors that are helping keep the year-to-date BOP tilted to a surplus include the continuously growing inflows of inbound remittances from overseas-based Filipinos, revenues from business process outsourcing and revenues from foreign tourists.

Last June, the BSP said it was expecting the full-year BOP in 2023 to show a narrower deficit of $1.2 billion, which is about one-fifth of the $7.26-billion deficit recorded in 2022.

The BSP’s latest BOP forecast deficit is narrower compared to the $1.6 billion it was expecting based on conditions of slower economic activities worldwide that were prevailing last March. INQ