PHL payments position swings to $2.7-B deficit in September

The country’s balance of payments position (BOP) returned to a deficit in September after posting a surplus in August, data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed.

The payments deficit reached $2.696 billion last month, a reversal from a surplus of $1.27 billion in August and $24 million in September 2017.

The BOP consists of the country’s transactions with the rest of the world during a given period. A surplus means more funds entered the country, while a deficit means more funds went out.

“Outflows in September 2018 stemmed mainly from foreign exchange operations of the BSP and payments made by the National Government for its foreign exchange obligations,” the central bank said.

“These were partially offset, however, by the net foreign currency deposits of the national government,” it said.

Year-to-date, the payments positions stood at a deficit of $5.136 billion in January to September 2018.

“The higher deficit may be attributed partly to the widening merchandise trade deficit for the first eight months of the year. This, in turn, was brought about mainly by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion,” the BSP said.

The deficit was brought about by continuous importation of capital goods for the government’s infrastructure program, weak peso, and rising world prices of petroleum and other fuel products, Cid Terosa, dean at the University of Asia and the Pacific School of Economics, told GMA News Online.

“Also, imports of consumer goods going to the last quarter of the year can pull up the deficit,” Terosa said.

The BOP position is consistent with the final gross international reserves level of $74.94 billion as of end-September 2018.

The BSP defines GIR as foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances and for managing the magnitude of such imbalances, these include gold holdings, foreign investments, and foreign exchange.

“At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 6.8 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

It is also equivalent to 5.9 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity, according to the central bank. —VDS, GMA News