THE country’s transactions with the rest of the world slumped back to the deficit territory in April this year, reversing the gains seen in the previous month.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the overall balance of payments (BOP) position posted a deficit of $415 million in April 2022.
This is a reversal from the $2.61-billion BOP surplus recorded in the same month last year and from the $754-million surplus in March this year.
The BOP is usually considered an important economic indicator in an economy, as it shows the level of earnings or expenses of the Philippines with its transactions with the world. A surplus means that the country had more dollar earnings than its dollar expenditures during the period.
“The BOP deficit in April 2022 reflected outflows mainly from the National Government’s [NG] foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures,” the BSP said.
Due to the deficit in April, the cumulative BOP position registered a surplus of $79 million in the first four months of the year. This level is also a reversal from the $231-million deficit recorded in the same period a year ago.
Based on preliminary data, the BSP said the cumulative BOP surplus reflected inflows that stemmed mainly from personal remittances, net foreign borrowings by the NG, and foreign direct investments.
The BSP earlier projected that the 2022 BOP will hit a deficit of $4.3 billion, or 1 percent of the country’s gross domestic product (GDP).
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said for the coming months, the BOP could improve on the back of continued growth in the country’s structural US dollar inflows. These are remittances, revenues from Business Process Outsourcing (BPO), foreign direct investments (FDI), tourism receipts, among others.
Ricafort also said measures to re-open the local and global economy toward greater normalcy are expected to support dollar inflows to the country and help prop up the country’s BOP position.