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March 01, 2024

Philippines book $1.6B BOP deficit in May, biggest in 15 months

The country’s overall balance of payments (BOP) position posted a deficit of $1.61 billion in May, the widest in 15 months or since the $2.03 billion booked in February last year, as more US dollars flowed out for he payment of the government’s foreign obligations as well as higher expenditures.

The shortfall last month was 15 percent higher than the $1.4 billion booked in the same month last year.

“The BOP deficit in May 2022 reflected outflows mainly from the National Government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the BSP said.

The BOP is the difference in total values between payments into and out of the country over a period. A surplus means more US dollars flowed in from exports, remittances from overseas Filipino workers (OFWs), business process outsourcing (BPO) earnings and tourism receipts that what came out to pay for the importation of more goods, services, and capital.

According to the BSP, he BOP deficit in May brought the cumulative BOP level for January to May this year to $1.53 billion deficit, lower than the $1.63 billion shortfall recorded in the same period a year ago.

“Based on preliminary data, this cumulative BOP deficit reflected the trade in

goods deficit, which was partly offset by inflows such as from personal remittances, net foreign borrowings by the NG, foreign direct and portfolio investments,” the central bank said.

It added that the country’s gross international reserves (GIR) level declined to $103.65 billion as of end-May from $105.4 billion as of end-April.

“Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.7 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

The buffer, it added, is also about 7.4 times the country’s short-term external debt based on original maturity and 4.7 times based on residual maturity.

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