From a surplus last year, the Philippines’ balance of payments (BOP) position swung aggressively to a deficit in the first seven months of the year, which was evident even in July alone.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the BOP, which reflects the country’s transactions with the rest of the world, shifted to a deficit of $5.8 billion in the January to July period from a surplus of $1.5 billion in the same period last year.

The year-to-date BOP deficit was “largely due to the continued trade-in-goods deficit,” the central bank reported on Wednesday, Aug. 20.

According to the Philippine Statistics Authority (PSA), the goods trade deficit for the first semester of the year narrowed by 4.4 percent to $24 billion from $25.1 billion in the same period a year ago.

Despite the continued trade deficit, the BSP said this was “partly offset by the sustained net inflows from personal remittances from overseas Filipinos (OFs), foreign borrowings by the national government, and foreign portfolio investments (FPIs)” or so-called hot money.

In July alone, the Philippines’ BOP posted a $167-million deficit, a turnaround from the $62-million surplus in the same month last year, and the $226-million surplus in June

As per the BSP, the BOP deficit reflected the national government’s drawdowns on its foreign currency deposits with the central bank to service foreign debt.

The BSP noted that the deficit in July reflected a decrease in the gross international reserves (GIR), or United States (US) dollar stock, which declined by 0.6 percent to $105.4 billion as of end-July from $106 billion a year ago.

Despite this decline, the BSP noted that the latest GIR level still offers solid external liquidity, enough to cover 7.2 months’ worth of imports and payments for services and primary income.

“Specifically, the latest GIR level ensures availability of foreign exchange (forex)to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” it said.

It also covers about 3.4 times the country’s short-term foreign debt based on residual maturity.

Short-term debt based on residual maturity includes all foreign debt originally due in one year or less, along with upcoming principal payments on medium- and long-term loans from both the public and private sectors that are set to mature within the next 12 months.