The country’s balance of payments position posted a deficit of $73 million in March, a reversal of the $448-million surplus in the same month last year, due to debt servicing, the Bangko Sentral ng Pilipinas said Thursday.
“The BOP deficit in March 2021 reflected outflows arising mainly from the national government’s net withdrawal of its foreign currency deposits with the BSP, which were largely used for debt servicing,” the BSP said in a statement.
It said the cumulative BOP position also registered a deficit of $2.84 billion, higher than the $68-million gap recorded a year earlier.
Preliminary data attributed the three-month BOP deficit to the government’s net repayments of foreign loans and the growing merchandise trade gap.
The BOP position also reflected the decrease in the final gross international reserves to $104.48 billion as of end-March from $105.16 billion in end-February.
“The latest GIR level represents a more than adequate external liquidity buffer, which can help cushion the domestic economy against external shocks,” the BSP said.
The buffer is equivalent to 12 months’ worth of imports of goods and payments of services and primary income. It is also about 7.3 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity.
The BOP posted a record surplus of $16.02 billion in 2020, pushing up the GIR to $110.12 billion despite the challenging environment highlighted by the prolonged COVID-19 pandemic.
Meanwhile, foreign portfolio investments or hot money also posted higher net outflows of $541 million in March, compared to the $40-million net outflows in February as fund managers reacted negatively to the rising inflation and the re-imposition of community quarantines in NCR Plus to prevent the further spread of the pandemic.
Gross inflows in March reached $824 million, while total outflows hit $1.37 billion.
“Developments during the month included investor reaction to rising inflation and vaccine rollout amid the surge in virus infection and re-imposition of restrictions on mobility in the National Capital Region and nearby provinces,” the BSP said.
This brought net outflows since the start of the year to $483 million, lower compared to the net outflows of $1.48 billion in the same period last year.
About 90.5 percent of investments were in Philippine Stock Exchange-listed securities, pertaining mainly to banks, property companies, holding firms, food, beverage and tobacco companies and transportation services firm. The balance of 9.5 percent went to investments in peso government securities.
The United Kingdom, the United States, Luxembourg, Switzerland and Hong Kong were the top five investor countries in March.
Foreign portfolio investments are also called hot money because of the ease they are invested in and taken out of the domestic financial markets.