Philippine payments deficit widens to 15-month high in May

NEWS

The Philippine balance of payments (BOP) deficit widened in May to mark the biggest in 15 months, data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed.

The central bank reported a $1.606-billion BOP deficit in May, the biggest since the $2.019-billion deficit in February 2021. This is also wider than the $415-million deficit in April and the $1.397-billion deficit in May 2021.

The BOP details the country\\\’s transactions with the rest of the world during a specific period. A deficit means more funds exited the country.

“The BOP deficit in May 2022 reflected outflow 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,” it said in an accompanying statement.

Latest data available from the Bureau of the Treasury (BTr) showed that the government’s running debt pile hit P12.763 trillion as of end-March 2022, carving a fresh record high.The latest BOP deficit brought the year-to-date level to a $1.527-billion deficit, reversing the $79-million surplus in April but narrower than the $1.627-million deficit the same period last year.

“Based on preliminary data, this cumulative BOP deficit reflected the trade in goods deficit, which was partly offset by inflows such as from personal remittances, net foreign borrowings by the national government, foreign direct and portfolio investments,” the BSP said.

The gross international reserves (GIR) level fell to $103.65 billion as of end-May, lower than the $105.4 billion recorded at the end of the previous month.

“Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.7 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

The central bank said the latest GIR is also about 7.4 times the country’s short-term external debt based on original maturity, and 4.7 times based on residual maturity.