BOP gap slightly lower in February

By LEByELCEE. CH.

The balance of payments (BOP) deficit in February of $429 million is lower than January’s $531 million and little changed from same time in 2016 of $436 million.

This brings the two-month BOP shortfall to $961 million, just $39 million away from the central bank’s estimate of $1 billion deficit for the whole of 2018.

The January-February BOP gap is more than the $445 million in the same period last year.

According to the Bangko Sentral ng Pilipinas (BSP), the “higher cumulative BOP deficit for the first two months of the year may be attributed partly to the widening merchandise deficit in January, 2018 (based on Philippine Statistics Authority data) as well as higher net outflows of foreign portfolio investments (based on BSP-registered transactions) for the first two months of the year.”

The BSP also said the BOP gap is due to outflows which in February came from BSP’s foreign exchange operations as well as National Government (NG) payments for its maturing foreign currency loans.

“These were partially offset, however, by net foreign currency deposits of the NG and income from BSP's investments abroad during the month,” it explained.

In 2017, the BOP deficit stood at $863 million, higher than 2016’s $420 million. As noted by the BSP in several reports, the continued BOP deficit were not only because of a larger merchandise trade gap but also due to the reversal of foreign portfolio investments in 2017.

The higher gap in the country’s trade-in-goods also increased the current account deficit $2.5 billion in 2017 from $1.2 billion in 2016. The current account, along with financial and capital accounts, are part of the BOP computation.

The BOP and current account balances reverted to deficits after nine years of straight surpluses in the case of the BOP, and 13 years of surpluses for the current account.