The country’s balance of payments position swung to a deficit of $316 million in February from a $985-million surplus a year ago due to debt servicing by the national government, data from Bangko Sentral ng Pilipinas over the weekend show.
The figure brought the balance of payments in the first two months of 2016 to a deficit of $1.129 billion, a reversal of the $1.121-billion surplus a year ago. The February deficit, however, was lower than the $813-million gap recorded a month ago.
“... January was especially challenging due to some outflows given the negative market sentiment following the expected US Fed tightening and China slowdown. February yielded less negative BoP position with the resumption of capital inflows,” Bangko Sentral Deputy Governor Diwa Guinigundo said in a text message.
“We don’t expect the BoP deficit to persist through the end of 2016. Instead we expect BoP to show around $2 billion in surplus on account of sustained current account surplus courtesy of remittances and BPO revenues,” Guinigundo said.
Bangko Sentral earlier projected remittances to grow around 4 percent this year, the same pace of expansion as last year’s.
Guinigundo said monetary authorities were closely monitoring external developments because of their impact to the country’s external trade. These are the tightening moves of the US Federal Reserve, the growth trajectory of the Chinese economy and oil prices in international markets.
“Slowdown in the growth of Chinese economy will affect emerging markets and exchange rate. [Also] I hope the US Fed will have only two tightening moves this year and not four as planned [previously],” Guinigundo said.
He said Bangko Sentral was ambivalent about oil prices. He said lower oil prices negatively affect oil-exporting countries, which are also the same markets for migrant Filipino workers.
The BoP summarizes the country’s economic transactions with the rest of the world, with a deficit indicating foreign exchange payments outstripping receipts and a surplus the reverse.
Persistent surpluses help build up the country’s gross international reserves, an ample supply of which helps prop up the peso vis-à-vis the US dollar and keep domestic inflation at bay.
The BoP BOP swung to a surplus of $2.616 billion in 2015, surpassing the target of $2 billion and a reversal of the $2.858-billion deficit in 2014.
The BoP in December stood at a surplus of $481 million, a reversal of the $141-million deficit a month ago and $864-million deficit a year ago.
The balance of payments position is 2016 is expected to register a surplus of $2.2 billion on inmproving global growth outlook and the favorable growth prospects of the domestic economy.