BOP deficit dips to $59 M in May

The Philippines has a balance of payments (BOP) deficit of $59 million in May, lower compared to April’s $917 million which was the biggest monthly BOP shortfall for the year so far.

For the January to May period, the BOP deficit was at $136 million from $78 million which was also a deficit figure, according to data from the Bangko Sentral ng Pilipinas (BSP).

Last week, the BSP recast its BOP estimate for 2017 from a surplus to a deficit of $500 million. In December, central bank officials were still hopeful that BOP could turn up in a surplus of $1 billion for the year.

The BOP - a summary of the country’s transactions with other countries -- are largely affected by fund flows such as investments and actual money transmissions.

These flows are in the financial account which includes direct investments, portfolio investments and other forms of investment. The current account, a big part of the BOP, covers trade in goods, services, primary income, and secondary income while the capital account are capital transfers.

For 2017, the BSP also changed its current account projection of a surplus $800 million to a deficit of $600 million.

BSP officials revised its external account numbers in antipation of higher imports this year, as well as other external factors that would impact on BOP such as rising US interest rates and the uneven global growth.

Fund outflows resulted to the BOP reporting a deficit in 2015 of $2.6 billion, ending nine years straight of surplus positions. Increased imports led to another $420 million deficit at the end of 2016.

For the first quarter, the current account had a deficit of $318 million, reversing a $730 million surplus position the same period in 2016, because of a widening trade-in-goods deficit. This is the first time since 2002 that current account reported a shortfall.

"The negative overall BOP position was a result of the deficit in the current account and net outflows (or net lending by residents to the rest of the world) in the financial account," the BSP said in a report.