THE country continued to post a Balance of Payments (BOP) deficit for the fifth consecutive month in August 2023, according to the Bangko Sentral ng Pilipinas (BSP).
The country’s overall BOP deficit reached $57 million in August, wider than the $53 million posted in July, but narrower than the $572 million recorded in the same month last year.
“The BOP deficit in August 2023 reflected net outflows arising mainly from the National Government’s [NG] payments of its foreign currency debt obligations,” BSP said.
However, BSP said that the wider deficit in August did not prevent the country from posting a BOP surplus in the January to August period this year.
Based on the data, the country’s cumulative BOP position was at a surplus of $2.1 billion in the eight-month period. This was a reversal from the $5.5-billion deficit recorded in the same period a year ago.
“This development reflected mainly the improvement in the balance of trade and the sustained net inflows from personal remittances, trade in services, and foreign borrowings by the NG,” BSP said.
Last week, the Philippine Statistics Authority (PSA) said the country’s trade deficit for January to July 2023 reached $32.2 billion.
Based on the preliminary International Merchandise Trade Statistics data, this was a narrower trade deficit than the $35.8-billion deficit posted in the same period last year.
Meanwhile, with the latest BOP data, the country’s gross international reserves (GIR) level decreased to $99.6 billion as of end-August 2023 from $100 billion as of end-July 2023.
The latest GIR level represents a more-than-adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. This is more than twice the recommended three-month import cover.
This data ensures the availability of foreign exchange to meet BOP financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.
Moreover, it is also about 5.7 times the country’s short-term external debt based on original maturity and 3.9 times on residual maturity.
BSP said short-term debt based on residual maturity refers to outstanding external debt with an original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.