The country’s balance of payments position yielded a deficit of $572 million in August, a reversal of the $1-billion surplus registered a year ago after the government settled some of its foreign debt, the Bangko Sentral ng Pilipinas said Monday.
“The BOP deficit in August 2022 reflected outflows arising mainly from the national government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the BSP said in a statement.
The BOP deficit in August brought the January to August level to a $5.5-billion deficit, higher than the $253-million shortfall a year earlier.
Preliminary data showed that the cumulative BOP deficit reflected the widening trade-in-goods deficit.
The gross international reserves level also declined to $97.4 billion as of end-August from $99.8 billion in July.
“Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income. Moreover, it is also about seven times the country’s short-term external debt based on original maturity and 4.4 times based on residual maturity,” the BSP said.
BOP refers to the difference in total value between payments into and out of a country over a period.
The BSP raised the projected BOP deficit this year to $8.4 billion from a previous estimate of $6.3-billion shortfall, on the further weakening of global demand. The higher BOP deficit forecast would be equivalent to around -2.0 percent of the gross domestic product. Julito G. Rada
“This development is due mainly to the projected further widening of the current account deficit to $20.6 billion [-5.0 percent of GDP] from $19.1 billion [-4.6 percent of GDP], owing to the sustained acceleration of goods imports alongside moderation of goods exports,” Sittie Hannisha Butocan, director of the BSP’s Department of Economic Research, said in an online briefing.
The Monetary Board approved the new set of 2022 and 2023 BOP projections during the Sept. 16 meeting. The projections incorporate the latest available data and recent emerging developments.
Butocan said the emerging BOP outlook over the near term remained subdued as external risks intensified relative to the last forecast round in June 2022.
Risks of further downward revision in global growth prospects, record-high inflation print worldwide, more aggressive monetary policy tightening by major central banks, continued economic slump in China, and lingering Ukraine-Russia conflict, among others, are expected to broadly weaken global demand conditions, and hence, the country’s external sector, she said.
“In particular, these are expected to moderate the growth in merchandise exports and, along with increased imports, will result in a further widening of the goods trade gap,” Butocan said.