BOP deficit surges in May

The BSP said dollar outflows last month were mainly due to the foreign exchange operations of the central bank and payments of the national government for its maturing foreign exchange obligations. (Shutterstock photo)

MANILA — The Bangko Sentral ng Pilipinas (BSP) reported Tuesday that the country’s balance of payments (BOP) position this May posted a deficit of USD583 million, a surge relative to the USD59-million deficit in May 2017.

The BSP said dollar outflows last month were mainly due to the foreign exchange operations of the central bank and payments of the national government for its maturing foreign exchange obligations.

Five-month BOP position this year stood at USD2.08 billion. It was in the same period in 2014 that the country breached the USD2-billion deficit when it reached a total of USD2.86 billion worth of dollar outflows.

This year’s deficit was also higher than the USD136-million deficit posted in January to May 2017.

“The higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise trade deficit (based on the Philippine Statistics Authority preliminary data) for the first four months of the year,” the central bank noted.

Government data showed that merchandise trade deficit in January to April 2018 ballooned to USD12.2 billion, surging by 59.3 percent from USD7.66 billion deficit in the same period last year.

The BSP pointed out that the widening of trade deficit in the first four months of the year was due to the “sustained rise in imports of raw materials and capital goods to support domestic expansion.”

Meanwhile, gross international reserve (GIR) level at end-May 2018 stood at USD79.2 billion, which is equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income.

Just last week, the BSP hiked its BOP deficit outlook to USD1.5 billion at end-2018 from its initial projection of USD1 billion.

The sustained momentum of inward shipments of capital goods, manufactured goods, and consumer goods, which is in line with the robust domestic demand, coupled with moderate increase in commodity prices prompted the central bank to revise its BOP deficit forecast upward.