By Lee C. Chipongian
The country’s balance of payments (BOP) reversed to a surplus position for the month of August with $1.27 billion, the first monthly surplus this year, bringing down the year-to-date deficit to $2.44 billion at the end of the 8-month period.
The August surplus upturned July’s $455 million deficit and a similar $7-million shortfall same month in 2017.
According to the Bangko Sentral ng Pilipinas (BSP), “Inflows in August 2018 stemmed mainly from net foreign currency deposits of the National Government (NG) and income from the BSP’s investments abroad during the month. These were partially offset, however, by the payments made by the NG for its foreign exchange obligations and foreign exchange operations of the BSP during the month in review.”
However, the cumulative BOP deficit of $2.44 billion still remained higher than same period last year of $1.39 billion.
“The higher cumulative BOP deficit (January to August) may be attributed partly to the widening merchandise trade deficit (based on the Philippine Statistics Authority’s preliminary data) for the first seven months of the year that was brought about by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion,” the BSP explained.
The central bank continues to assess that the current dollar stock level remains consistent with the country’s BOP position. As of end-August, the country’s gross international reserves total $77.93 billion.
BSP Deputy Governor Diwa C. Guinigundo said they will update and review external account estimates for 2018 and 2019 next month. He said however that inflows coming in starting in October until December should pull up BOP from its current deficit position as of end-August. “We still expect it to improve,” he said.
The BSP estimates a BOP deficit of $1.5 billion for 2018 and a current account deficit of $3.1 billion. Both projection has been surpassed.
Guinigundo said the overall BOP balance continued to be manageable as far as they are concerned. The $1.5 billion BOP shortfall projection is equivalent to -0.4 percent of gross domestic product.
The current account is a main component of the BSP. It comes from the inflows of overseas Filipino remittances as well as business process outsourcing and tourism receipts. All these are structural inflows and major sources of foreign exchange for the country.
Last year, the BSP recorded a BOP deficit of $863 million, higher than 2016’s readjusted number of $1 billion.