The balance of payments deficit widened by 168 percent in the first seven months to $3.7 billion from a shortfall of $1.38 billion registered a year ago, data from the Bangko Sentral ng Pilipinas show.
“The higher cumulative BoP deficit for the period may be attributed partly to the widening merchandise trade deficit [based on the Philippine Statistics Authority’s preliminary data] for the first half of the year that was brought about by the sustained rise in imports of raw materials and capital goods to support domestic economic expansion,” the Bangko Sentral said.
The merchandise trade deficit hit $19.1 billion in the first half, up 62.6 percent from the $11.7-billion gap a year earlier. Imports increased 13.2 percent in the six-month period to $51.8 billion, while exports fell 3.8 percent to $32.7 billion.
The Bangko Sentral said the BoP position yielded a deficit of $455 million in July, lower than the $678-million gap in the same month last year.
“Outflows in July 2018 stemmed mainly from payments made by the national government for its maturing foreign exchange obligations and foreign exchange operations of the BSP,” it said.
These were partially offset by net foreign currency deposits of the national government and income from the BSP’s investments abroad.
The Bangko Sentral said the BoP position was consistent with the gross international reserves of $76.72 billion as of end-July. It said the figure represented “more than ample liquidity buffer and is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.”
“It is also equivalent to 6.1 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity,” it said.
The BoP summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments exceed receipts.
Persistent BoP deficits eat into the gross international reserves and affect the value of the peso against other currencies.
The Bangko Sentral earlier said it was expecting the BoP position to post a wider deficit of $1.5 billion this year compared to an earlier estimate of $1-billion shortfall. The BoP registered a deficit of $863 million in 2017.