July 19, 2019 at 08:10 pm
Julito G. Rada
The country’s overall balance of payments posted a deficit of $404 million in June, significantly lower than the $1.18-billion gap recorded in the same month last year, the Bangko Sentral ng Pilipinas said Friday.
“The substantial outflow in June 2019 stemmed from the principal and interest payments of the government on its foreign exchange obligations,” the BSP said in a statement.
“This outflow was partially tempered, however, by the government’s net foreign currency deposits, and the BSP’s foreign exchange operations as well as income from its investments abroad during the month in review,” it said.
On a cumulative basis, however, the BoP position in the first six months of 2019 registered a surplus of $4.79 billion, a turnaround from the $3.26-billion deficit year-on-year.
“The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first five months of the year and net inflows of foreign direct investments during the first four months of the year,” it said.
The BoP position reflected the final gross international reserves level of $85.77 billion at the end of June. The GIR at this level represents a more than ample liquidity buffer and is equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.
It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.
The Bangko Sentral last month revised upward the BoP projections this year to a surplus of $3.7 billion from a deficit of $3.5 billion as of November 2018, taking into account the expected sustained strength of the domestic economy amid the downward revision in the global economic growth outlook.
The central bank said other key considerations in the revised BoP projections were the near-term moderation in the global trade outlook, expected decline in commodity prices, possible ratcheting up of trade tensions between the US and China, and US Fed’s shift to “dovish” monetary policy stance.
Other factors were the uncertainties over Brexit developments, expected modest rebound in non-resident capital flows to emerging markets and the bright outlook of the domestic economy.