The central bank on Tuesday reported a Philippine balance of payments (BOP) deficit of $1.939 billion as of end-June, reversing the $4.109 billion surplus same time last year.
The Bangko Sentral ng Pilipinas (BSP) in a statement said that based on preliminary data, the January-June BOP deficit was “partly attributed to a wider merchandise trade deficit” which as of end-May, totalled $14.18 billion, up from $9.95 billion same period in 2020.
For the month of June, the BOP shortfall of $312 million was lower than the deficit in May of $1.397 billion. The current shortfall was a reversal of the $80 million surplus recorded last year.
“The BOP deficit in June reflected mainly the outflows arising from the foreign currency withdrawals of the National Government (NG) from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures, and the BSP’s net foreign exchange operations,” said the BSP. “These were partly offset, however, by the inflows from the BSP’s income from its investments abroad.”
The BSP also reported a final gross international reserves (GIR) for the first half of 2021 of $105.76 billion, lower than end-May’s $107.25 billion.
The central bank said the latest GIR level is still adequate external liquidity buffer. It is equivalent to up to 12 months’ worth of imports of goods and payments of services and primary income. It is also about 7.7 times the country’s short-term external debt based on original maturity and 5.1 times based on residual maturity.
The BOP report is a comprehensive review of the country’s current account or the trade-in-goods and services, income, and current transfers, as well as the capital and financial accounts which are direct, portfolio and other investments.
For this year, the BSP is projecting a BOP surplus of $7.1 billion and for 2022, the estimate is also a surplus of $2.7 billion.
The government adjusted its BOP forecasts higher after raising the country’s current account projection to a $10 billion surplus for 2021.
The BSP also expects foreign direct investments (FDIs) of $7.5 billion for this year, and $5.5 billion foreign portfolio investments. As for the GIR, the BSP is projecting $115 billion by end-2021.
In 2020, the Philippines reported a BOP surplus of $16.022 billion, more than double compared to $7.843 billion in 2019. The higher NG net foreign borrowings last year and the lower merchandise trade deficit on account of the pandemic were the factors for the favorable BOP performance last year. Inflows from personal remittances, foreign direct investments, and trade in services also contributed to the BOP surplus.