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REVERSING FROM THE P226-million and P62-million surpluses recorded a month and year earlier, Philippine balance of payments (BoP) position swung to a US$167-million deficit in July, the Bangko Sentral ng Pilipinas (BSP) reported.
According to the deputy governor of the BSP’s Financial Supervision Sector (FSS) Lyn Javier, the result was due to the “national government’s (NG) drawdowns on its foreign currency deposits with the Central Bank to service external debt obligations.” the central bank said in a statement.
The BoP is a summary of a country’s transactions with the rest of the world for a specific period which consists of the current account, which covers trade in goods, services and primary and secondary income (overseas Filipino worker remittances); the capital account—capital transfers and nonfinancial assets; and the financial account or investments from abroad, Javier explained.
“The cumulative count remained in deficit at US$5.76 billion, a reversal from the US$1.5-billion surplus recorded in January-July 2024. Preliminary data indicate that the year-to-date BoP deficit was largely due to the continued trade in goods deficit.”
This was partly offset by the sustained net inflows from personal remittances from overseas Filipinos, foreign borrowings by the NG and foreign portfolio investments, she added.
‘[D]espite the decline … the BSP’s reserves remained an adequate external liquidity buffer, equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income.’
ADEQUATE EXTERNAL LIQUIDITY BUFFER
Accordingly, the BSP expects the deficit to widen to US$6.3 billion this year, higher than the US$4.0 billion projected in March. It is seen narrowing to US$2.8 billion next year, however, from the previous assumption of US$4.3 billion.In addition, the shortfall has weighed on the country’s gross international reserves (GIR), which dropped to $105.4 billion as of end-July from $106.0 billion a month earlier.
However, despite the decline, Javier was optimistic as the BSP’s reserves remained an “adequate external liquidity buffer, equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income.”
“This covers about 3.4 times the country’s short-term external debt based on residual maturity. Our reserves are forecast to end 2025 at US$104 billion, down from the previous projection of US$105 billion, before rising to US$105 billion next year” she pointed out.