The country’s balance of payments ran a $368-million deficit in October, widening the total shortfall in the first 10 months to P$1.74 billion, data from the Bangko Sentral ng Pilipinas show.
The October BoP deficit was larger than the $183-million gap recorded in the same month last year. It was also a reversal of the $24-million surplus in September 2017.
BoP, which represents the country’s transactions with the rest of the world, captures foreign inflows and outflows that affect the movement of the peso against other currencies. A continuous BoP deficit results in the reduction of the gross international reserves, which is maintained by Bangko Sentral as a buffer against external volatilities.
The Bangko Sentral said the BoP incurred a larger deficit in October after the government settled more maturing foreign exchange obligations.
Data showed that the $1.74-billion BoP deficit in the first 10 months was a reversal of the $1.465-billion surplus registered a year earlier.
“Outflows stemmed mainly from the foreign exchange operations of the Bangko Sentral ng Pilipinas and payments made by the national government for its maturing foreign exchange obligations during the month. These were partially offset by the national government’s net foreign currency deposits and income from BSP’s investments abroad,” the Bangko Sentral said.
Bangko Sentral Deputy Governor Diwa Guinigundo earlier said current account, one of the main components of BoP, booked a deficit of $234 million in the first half, although this was lower than the $424-million deficit a year ago. The current account deficit accounted for around 0.2 percent of GDP.
The Bangko Sentral expects the BoP to post a $500-million shortfall this year, a revision of the previous estimate of a $1-billion surplus.
Current account was also projected to reverse to a deficit of $600 million this year from the actual surplus of $600 million last year.
Global debt watcher Fitch Ratings said in a previous report that the Philippines’ current account would end at a deficit this year as imports rose amid the strong demand by the expanding economy.
The BoP recorded a deficit of $420 million in 2016, a turnaround from a surplus of $2.616-billion in 2015.