By Lee C. Chipongian
The country’s balance of payments (BOP) deficit reached $3.712 billion as of end-July due to the expanding trade gap and continued rise in the import bill, the Bangko Sentral ng Pilipinas (BSP) reported.
For the month of July, the shortfall of $455 million was however lower compared to June’s $1.177 billion but not enough to pull back the overall deficit. The seven-month BOP deficit is higher than what was reported same time last year of $1.384 billion.
“Despite the improvement in the overall BOP position for (July) the cumulative BOP position yielded a higher deficit of $3.71 billion compared to the $1.38 billion BOP deficit recorded in the comparable period in 2017,” said the BSP.
“The higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise trade deficit (based on the Philippine Statistics Authority's preliminary data) for the first half of the year that was brought about by the sustained rise in imports of raw materials and capital goods to support domestic economic expansion.”
The July deficit – which was lower than the previous year’s $678 million deficit -- was mainly attributed to outflows from government payments of maturing foreign currency loans as well as from the foreign exchange operations of the BSP. “These were partially offset, however, by net foreign currency deposits of the National Government and income from the BSP's investments abroad during the month,” said the BSP.
The BSP had estimated a $1.5 billion overall BOP deficit for 2018. Actual BOP numbers surpassed this level in April when it reported a $1.497 billion deficit.
When the BSP revised the BOP projection in June, it also changed the current account estimates of $700 million deficit and increased it to $3.1 billion.
BSP Governor Nestor A. Espenilla Jr. continues to assess an external payments position that remains manageable.
The gross international reserves (GIR) at $76.72 billion as of end-July is considered sufficient enough as buffer. The BOP position, according to the BSP, “is consistent with the final GIR level … as of end-July”.
At this level, the GIR represents more than ample liquidity buffer and is equivalent to 7.4 months' worth of imports of goods and payments of services and primary income. It is also equivalent to 6.1 times the country's short-term external debt based on original maturity and 4.1 times based on residual maturity.