BoP gap grew to $994m in 1st quarter
The balance of payments posted another deficit in March 2017, amid the volatility in financial markets, weighing on the value of the peso and gross international reserves.
Data from Bangko Sentral ng Pilipinas showed the BoP yielded a deficit of $550 million in March, wider than the $436-million deficit in February and a reversal of the $854-million surplus in March 2016.
This brought the BoP position to a deficit of $994 million in the first quarter, higher than the deficit of $210 million in the same period last year.
ING Bank Manila senior economist Joey Cuyegkeng said in a statement the country’s external payments position was under some stress and marked the second straight quarter the country incurred a BoP deficit.
“The likelihood of another deficit of the current account is high. If this is the case for first quarter of 2017, then this would represent also a second straight quarter of a current account deficit,” Cuyegkeng said.
“We may need to revisit our base case of a current account surplus this year. We expect a current account surplus of around $700 million to $800 million or around 0.2 percent of GDP this year. If the worst case develops, then we would be back to a twin deficit environment,” he said.
He said a rising ratio of current account and BoP deficits “could raise concerns and affect investor confidence about the country’s credit rating.”
BoP summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments exceed inflows. A BoP deficit affects the value of the peso against the US dollar and eats into the country’s gross international reserves.
Bangko Sentral earlier said concerns over trade and immigration policies of US President Donald Trump were affecting not only global but also the domestic financial markets.
Bangko Sentral Deputy Governor Diwa Guinigundo said the regulator was going to review the target of $1-billion BoP surplus this year.
The BoP incurred a $420-million deficit in 2016, a sharp reversal of the $2.616-billion surplus in 2015. The end-December figure also missed the $500-million BoP surplus target set by Bangko Sentral.
The peso fell to a 10-year low in the first quarter, while the gross international reserves declined to $80.87 billion in March from $81.4 billion in February.