The balance of payments reversed to a deficit of $68 million in the first quarter from a $3.8-billion surplus in the same period last year, according to the Bangko Sentral ng Pilipinas.
Data showed that while BOP yielded a surplus of $448 million in March, the three-month tally still registered a deficit amid the rising foreign portfolio investment outflows.
“This development may be attributed partly to the reversal of foreign portfolio investments to net outflows from net inflows in the first quarter of 2019, even as the merchandise trade deficit declined,” the BSP said.
The March surplus was also lower compared to the $627-million surplus in the same month last year. “The BOP surplus in March 2020 reflected mainly the inflows arising from the BSP’s foreign exchange operations as well as income from its investments abroad, and the national government’s foreign currency deposits with the BSP,” the BSP said.
“These inflows were partially offset, however, by the foreign currency withdrawals made by the national government to pay its foreign currency debt obligations during the month in review,” it said.
The BOP position reflects the final gross international reserves level of $88.86 billion as of end-March 2020. At this level, the GIR represents an ample external liquidity buffer, which is equivalent to around 7.9 months’ worth of imports of goods and services and payments of primary income.
The GIR is also about 5.3 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
BOP represents the country’s economic transactions with the rest of the world. BOP surpluses help build up the country’s gross international reserves, an ample supply of which helps prop up the peso against the US dollar and keep domestic inflation at bay.
The BOP swung to a surplus of $7.84 billion in 2019 from a deficit of $2.31 billion in 2018. Last year’s surplus was supported by higher net receipts of trade in services, personal remittance inflows from overseas Filipinos and sustained net inflows of foreign direct investments and portfolio investments.