In April, BOP swung to a deficit of $79M

The country’s balance of payments swung to a deficit of $79 million in April, from a surplus of $1.08 billion in the same month last year, as the government paid off foreign creditors.

The Bangko Sentral ng Pilipinas reported that in the first four months of the year, the country’s BOP was still at a surplus of $1.16 billion, although it represented a 75-percent decline from the $4.58 billion recorded in the same period last year.

BOP is a record of the country’s commercial transactions with the rest of the world. It shows the flow of dollars and other foreign currencies to and from the country.

A surplus adds to a country’s reserve of foreign currencies, the gross international reserves (GIR), while a deficit causes the GIR to decline.

BSP Deputy Governor Diwa Guinigundo said the outflow of dollars and other foreign currencies from the country exceeded the inflow in April because the government had to settle its dollar-denominated obligations.

Guinigundo said the outflow was also due to the foreign exchange operations of the BSP. The central bank had to use its dollar reserves to purchase pesos from the market to avoid an even faster depreciation of the local currency.

Despite the BOP deficit in April, BSP Governor Amando Tetangco Jr. said the country still enjoyed a hefty reserve of foreign exchange.

“The cumulative BOP for the first four months remains in a healthy surplus,” Tetangco said. “[The BSP is] watching global developments to see how these would affect the traditional drivers of the BOP.”

Latest data from the central bank showed that the country’s GIR stood at $76 billion as of end-April.

The BSP said the amount was equivalent to 11.4 months worth of the country’s imports, and was 6.4 times the country’s foreign currency debts maturing over the short term.

Based on international benchmarks, a GIR equivalent of at least four months-worth of imports is considered to be ample.