BoP incurs $436-m deficit
The Philippines posted a wider balance of payments deficit in February that pulled down the peso to a 10-year low, data from Bangko Sentral ng Pilipinas show.
The BoP deficit widened to $436 million in February from a $9-million gap in January, triggered by both external and domestic developments that affected financial markets.
It was also higher than the $251-million deficit registered a year ago. This brought the balance of payments in the first two months to a deficit of $445 million.
The peso closed at 50.21 against the US dollar on Feb. 28, near a 10-year low amid expectations of an interest rate hike by the Federal Reserve. It recovered slightly in March to settle at 50.09 against the greenback on Monday.
Foreign portfolio investments yielded a net outflow of $409 million in February, a reversal from the $58-million net inflow a year ago. The February net outflow was also a turnaround from the $301-million net inflow recorded in January.
Bangko Sentral said the factors that caused foreign funds to flee from domestic financial markets were the “concerns on trade and immigration policies under the Trump administration, and the closure order for several mining companies all over the country.” Julito G. Rada
Bangko Sentral Deputy Governor Diwa Guinigundo said despite the negative position, the BoP was facing a better outlook this year.
He said Bangko Sentral would review the target of $1-billion BoP surplus this year to see if an upward revision was necessary, taking into consideration the better outlook for global economic growth.
“We will recast that forecast, [taking into account] the world economic outlook showing that the world economy will grow by 3.4 percent from the earlier projection of 3.1 percent in 2017,” Guinigundo said in a quarterly briefing for the balance of payments over the weekend.
The $1-billion surplus target for the balance of payments this year was made by Bangko Sentral after the second review of economic data was conducted in November last year. He said the uncertainty was reduced by the pronouncements by US Fed chair Janet Yellen.
The balance of payments summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments exceed receipts.