BoP position reverts to deficit in May due to imports, investments

THE PHILIPPINES’ balance of payments (BoP) position reverted to a deficit in May on the back of higher imports and outbound capital investments, the central bank reported yesterday.

The country’s external payments position swung to a $ 59- million deficit last month, coming from a $ 917- million surplus posted in April and the $241-million surfeit in May 2016.

The BoP measures the country’s transactions with the rest of the world during a specific period. A deficit meant more funds fled the economy against what went in, while a surplus would show that more money entered the Philippines.

The May tally brought the five-month tally to a $136-million deficit, coming from a narrower $78-million shortfall as of endApril, according to the Bangko Sentral ng Pilipinas (BSP).

Sought for comment, BSP Deputy Governor Diwa C. Guinigundo attributed the wider gap to the central bank’s foreign exchange operations, and as the national government settled its maturing external loans.

Higher foreign currency deposits and income derived from the BSP’s offshore investments helped offset these outflows, the central bank official said.

“These bookings must have been driven by merchandise trade as imports continue to increase on account of good growth numbers and outflows in the foreign portfolio account,” Mr. Guinigundo said in a text message to reporters.

May saw a net hot money outflow at $ 24.35 million, marked by $ 1.509 billion of outbound capital versus $1.485 billion that flew in that month. Meanwhile, imports of goods grew by 11.1% from January-April from a year ago, according to the Philippine Statistics Authority.

The central bank expects the country’s BoP position to remain in deficit for the second straight year at a $500-million gap, coming from a $420-million shortfall in 2016 and reversing the previous forecast of a $ 1- billion surplus.

Mr. Guinigundo said last week that uneven global growth is seen to weigh on local prospects, coupled with sustained imports growth as Philippine firms pursue capital buildup as the government takes on more aggressive infrastructure spending.