The country’s balance of payments yielded a deficit of $1.6 billion in June, higher than the $312-million shortfall a year ago, as the government settled some of its foreign debt and imports continued to outpace exports, data from the Bangko Sentral ng Pilipinas show.
“The BOP deficit in June 2022 reflected outflows arising mainly from the national government’s payments of its foreign currency debt obligations,” the BSP said in a statement.
The figure brought the cumulative BOP deficit to $3.1 billion in the first half, also wider than the $1.9-billion shortfall registered in the same period last year.
“Based on preliminary data, this cumulative BOP deficit reflected the widening trade in goods deficit,” the BSP said.
The gross international reserves also declined to $100.9 billion as of end-June 2022 from $103.6 billion in May. The BSP said despite the decline, the latest GIR level still represented a more than adequate external liquidity buffer equivalent to 8.4 months’ worth of imports of goods and payments of services and primary income.
It is also about 7.1 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity.
The BSP earlier revised upward the BOP deficit target this year to $6.3 billion from the previous estimate of $4.3-billion deficit amid the buildup in external risks, most notably the aggressive monetary policy normalization in advanced economies, the slowdown in China, the war between Russia and Ukraine and the lingering COVID-19 pandemic.
BSP managing director Zeno Ronald Abenoja said in an online briefing the larger BOP deficit would be driven by the projected widening of the current account deficit to $19.1 billion (-4.6 percent of GDP) this year from the earlier projected $16.3 billion (-3.8 percent of GDP).
“This development is reflective of the foreseen sustained acceleration of goods imports by 18.0 percent driven mainly by the surge in international commodity prices alongside continued recovery of the domestic economy, while goods exports growth is forecasted to moderate to 7.0 percent due to lingering supply constraints, high input costs, and prospects of weaker global demand,” Abenoja said.
The BOP is seen to be broadly unchanged in 2023 from the previous deficit forecast of $2.6 billion (-0.6 percent of GDP), hinged on expectations of higher inflows in the financial account supported by improved business and consumer sentiment, stronger domestic demand and continued implementation of business-friendly legislative reforms.
The current account is seen to remain in deficit of $20.5 billion (-4.4 percent of GDP) in 2022, on widening of the trade gap.
The BOP posted a $1.3-billion surplus in 2021, down from the $16-billion surplus in 2020.