BOP deficit drops to $1.297B end-July

Published August 25, 2021, 5:26 PM

by Lee C. Chipongian

The Philippines’ balance of payments (BOP) deficit improved to $1.297 billion in the first seven months after a $642-million surplus in July, the Bangko Sentral ng Pilipinas (BSP) said in a report.

The end-July BOP deficit is a reversal of the $4.117 billion surplus in the same period in 2020.

The July BOP surplus of $642 million is higher than the $8 million posted same time last year. It also reversed the $312 million deficit for the month of June.

The National Government (NG) which issued $2.975-billion worth of Global Bonds in July, deposited this entire amount with the BSP.

According to the BSP, the July BOP “reflected mainly the NG’s net foreign currency deposits with the BSP and the BSP’s income from its investments abroad. These were partly offset, however, by the NG’s payments of its foreign currency debt obligations and the BSP’s net foreign exchange operations.”

In July, BSP’s net foreign currency deposits amounted to $1.34 billion. This was computed by deducting its withdrawals of $1.68 billion from its deposits with the BSP of $3.02 billion, based on central bank data.

As for the January-July deficit of $1.297 billion, the cumulative BOP deficit was partly attributed to a wider merchandise trade deficit which stood at $17.44 billion, up from $11.37 billion deficit same period in 2020, said the BSP citing Philippine Statistics Authority numbers.

The BSP on Wednesday also released the final gross international reserves for end-July of $107.15 billion, up from $105.76 billion end-June 2021.

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.