spot_img
28.6 C
Philippines
Friday, March 29, 2024

BOP registered a deficit of $415 million in April on increasing imports

- Advertisement -

The balance of payments, or the difference in value between payments into and out of the country, swung to a deficit of $415 million in April from a surplus of $2.61 billion a year ago, due to the government’s repayment of foreign debt and wider trade shortfall, the Bangko Sentral ng Pilipinas said Friday.

“The BOP deficit in April 2022 reflected outflows mainly from the national government’s foreign currency withdrawals from its deposits with the BSP as the government settled its foreign currency debt obligations and paid for various expenditures,” the BSP said in a statement.

The latest figure brought the cumulative BOP position to a surplus of $79 million in the first four months, a reversal of the $231-million deficit a year ago.

“Based on preliminary data, the cumulative BOP surplus reflected inflows that stemmed mainly from personal remittances, net foreign borrowings by the national government, and foreign direct investments,” BSP said.

The gross international reserves level declined to $105.4 billion as of end-April from $107.31 billion in March. At this level, the latest GIR still represented a more than adequate external liquidity buffer equivalent to 9.3 months’ worth of imports of goods and payments of services and primary income.

- Advertisement -

It was also about 6.7 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity.

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the BOP deficit in April partly reflected some net foreign portfolio investments outflows amid increased volatility in the global financial markets as triggered by hawkish Fed signals on more aggressive Fed rate hikes and reduction in the Fed’s balance sheet through asset/bond sales/quantitative tightening to better rein in elevated US inflation.

“For the coming months, continued growth in the country’s structural US dollar inflows such as OFW remittances, BPO revenues, foreign direct investments, foreign tourism receipts, POGO revenues, among others, amid measures to further re-open the local and global economy towards greater normalcy; as well as investment banking/fund-raising activities that entail foreign investment inflows would offset relatively wider trade deficits and some volatility in the global financial markets,” he said.

Ricafort said reform measures would continue to encourage more foreign investment inflows into the country, such as the CREATE Law, amendments to the Public Service Act, amendments to the Foreign Investment Act Retail Trade Liberalization Act, among others.

He said Russia’s invasion of Ukraine since Feb. 24, 2022 that led to the sharp increase in the prices of global oil/energy and other major commodities imported by the Philippines could further lead to wider trade deficits, thereby a drag on the BOP data.

The BSP earlier reduced its balance of payments projection this year to a deficit of $4.3 billion from the $0.7-billion surplus target made in the last quarter in 2021, taking into account the uncertainties posed by global developments.

- Advertisement -

LATEST NEWS

Popular Articles