BOP deficit swells to $1.57 B in April; GIR at $79.60 B

Philippines’ balance of payments (BOP) deficit widened to $1.497 billion as of end-April, as the central bank reviews the 2018 BOP forecast of $1 billion set earlier.

As noted by the Bangko Sentral ng Pilipinas (BSP), the continued BOP deficit is due to a larger merchandise trade gap and partly because of the reversal of foreign portfolio investments.

The BSP also released the final gross international reserves (GIR) for end-April which dropped to $79.60 billion from $80.51 billion in March and from $82 billion same time in 2017. Year-on-year the GIR was lower by $2.4 billion and by $1.6 billion from January this year.

The BOP deficit position has surpassed the $1 billion full-year estimate in March after the BSP reported a $1.227-billion shortfall at the end of the first quarter.

The current deficit is also higher than same period last year of $78 million.

“The higher cumulative BOP deficit for the first four months of the year may be attributed partly to the widening merchandise trade deficit (based on Philippine Statistics Authority data) for the first quarter of the year that was brought about by the sustained rise in imports to support domestic economic expansion,” the BSP explained.

For the month of April, the deficit had a slight increase to $270 million from $266 million in March. Compared to same time in 2017, it is a reversal of the $917-million surplus.

In the same statement, the BSP said outflows during the month “stemmed mainly from payments made by the National Government (NG) for its maturing foreign exchange obligations and foreign exchange operations of the BSP.”

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

The central bank said the BOP position remains consistent with the country’s gross international reserves or GIR level.

The BSP said at this level, the GIR “represents more than ample liquidity buffer and is equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.4 times the country’s shortterm external debt based on original maturity and 4.0 times based on residual maturity.”

In 2017, the BOP deficit stood at $863 million, higher than 2016’s $420 million.

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.