The country’s balance of payments (BOP) deficit widened to $4.92 billion as of end-July this year from $1.23 billion same period in 2021 due to a higher trade-in-goods shortfall in the first semester.
The Bangko Sentral ng Pilipinas (BSP) on Friday, Aug. 19, also reported a final gross international reserves (GIR) of $99.8 billion for the first seven months, slightly higher than what it reported last Aug. 8 of $98.83 billion.
Using preliminary data from the Philippine Statistics Authority, the BSP said the cumulative BOP deficit reflected the widening trade-in-goods deficit which reached $29.8 billion as of end-June this year, up from $18 billion same period in 2021.
BOP is the difference in total values between payments into and out of the country over a certain period.
When a BOP is in deficit position, it means more dollars flowed out of the country to pay for the importation of more goods, services and capital than what flowed into the country in the form of export revenues, remittances from overseas Filipino workers, business process outsourcing earnings and tourism receipts.
For the month of July only, the BOP deficit increased to $1.82 billion from June’s $1.57 billion and same period last year of $642 million.
The BSP said the July shortfall was due to outflows 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.
As for the GIR, the $99.8 billion is slightly lower compared to end-June’s $100.9 billion. The end-July GIR was the first time it fell below $100 billion since 2020 when it was at the $98 billion level. The GIR is the country’s reserve assets composed of gold holdings, foreign investments, foreign exchange, reserve position in the International Monetary Fund (IMF) and special drawing rights.
For this year, the BSP has downgraded its GIR forecast to $105 billion from its earlier estimate of $108 billion.
The central bank has also revised higher its 2022 BOP deficit projection to $6.3 billion from its previous estimate of $4.3 billion amid key external challenges such as high inflation and rising prices of oil and non-oil commodities.