The country’s balance of payments (BOP) deficit ballooned to $7.263 billion last year, reversing the $1.345 billion surplus in 2021 due in part to the opening of the economy which ushered in larger imports versus exports.

The end-year BOP shortfall was however lower than what the Bangko Sentral ng Pilipinas (BSP) earlier said it would be, which was an $11.2-billion deficit because of external risks, the trade gap and lower financial account flows. The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period.

The BSP said on Thursday, Jan. 19, that the end-year BOP shortfall was also lower than end-November’s $7.875 billion due to the $612 million surplus for the month of December.

In 2021, the surplus months were recorded in March, October and December.

“The BOP surplus in December 2022 reflected inflows arising mainly from the BSP’s net foreign exchange operations and net income from its investments abroad,” said the BSP.

Meanwhile, the BSP reported the final gross international reserves (GIR) level in 2022 of $96.1 billion, which was the same amount announced earlier. The central bank releases GIR numbers twice in a month, as preliminary and then as a final tally together with the BOP.

The GIR year-on-year fell by 12 percent from end-2021’s $108.79 billion due to US dollar selling. On Sept. 29, 2022, the peso vis-à-vis the US dollar weakened to a record low of P59.

The BSP said the latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income. It is also about 5.9 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.

As for the BOP, the cumulative January to December deficit was due to the widening trade in goods deficit. “Goods imports continued to surpass goods exports on the back of the increase in international commodity prices and resumption in domestic economic activities,” said the BSP.

Based on preliminary data from the Philippine Statistics Authority, the trade deficit in 2022 increased to $53.7 billion compared to $37.1 billion deficit in 2021.

The BSP is projecting a $5.4 billion BOP deficit in 2023.

The GIR, on the other hand, is expected to be around the $93 billion level by the end of this year. The GIR is composed of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and the IMF’s special drawing rights.