The country registered a $209-million deficit in its balance of payments (BOP) in March—the biggest monthly deficit in nearly three years.
Data from the Bangko Sentral ng Pilipinas showed that the BOP deficit in March was a reversal of the $2.02-billion surplus reported in the same month last year.
But the BSP said that in the first quarter of the year, the country’s BOP position remained comfortable with a surplus of $1.24 billion. Still, that figure was 64-percent lower than the surplus of $3.49 billion seen in the same period last year.
BSP Deputy Governor Diwa Guinigundo said that the outflow of foreign currencies in March exceeded the amount of cash coming in. He said the settlement of some of the government’s maturing debts to foreign creditors led to the shift in the country’s balance of payments.
The government still resorts to borrowing to partly finance its spending, as the amount of taxes and other revenues collected is not enough to address public expenditure requirements.
Also, Guinigundo was quick to point out that the deficit in the BOP had not been triggered by capital flight.
In fact, he said, foreign portfolio investments could increase this year due to prevailing global developments.
For 2012, the BSP expects a BOP surplus of $2.8 billion.
BOP is a record of the country’s commercial transactions with the rest of the world. A surplus in the BOP—where the inflow of dollars and other foreign currencies exceed the amount of cash going out—helps beef up the country’s total reserves of foreign exchange, or the gross international reserves (GIR).
In 2012, remittances, recovery in export earnings, foreign portfolio investments, and investments in the business process outsourcing (BPO) sector are expected to drive up foreign currency inflows.
The GIR currently stands at a record high of $77 billion. This amount is enough to cover about 11 months’ worth of imports. It is also about six times the country’s debt—denominated in foreign currencies—maturing within the short term.