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Philippines posted BOP deficit for fifth straight month, says BSP

The Philippines posted a balance of payments (BOP) deficit for the fifth straight month in August, as the national government withdrew from its deposits to settle foreign currency debt obligations during the month.

The Bangko Sentral ng Pilipinas (BSP) reported a $572-million BOP deficit in August, which compares with the $1.819-billion deficit in July and the $1.044-billion surplus the same month last year.

The BOP details the country's transactions with the rest of the world during a specific period. A deficit means more funds exited the country.

“The BOP deficit in August 2022 reflected outflows arising 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 central bank said in an accompanying statement.

The latest data available from the Bureau of the Treasury (BTr) showed that the government’s running debt swelled to a fresh record-high of P12.89 trillion as of end-July 2022.

The latest monthly deficit brought the year-to-date level to a $5.492-billion deficit, higher than the $253-million deficit in the comparable period of 2021.

“Based on preliminary data, this cumulative BOP deficit reflected the widening trade in goods deficit,” the BSP said.

Data from the Philippine Statistics Authority (PSA) showed that the balance of trade in goods stood at a $5.93-billion shortfall in July, up 69.1% from the $3.5-billion gap in July 2021.

The country’s gross international reserves (GIR) level likewise fell to $97.4 billion from $99.8 billion in July.

“[T]he latest GIR level represents a more than adequate external liquidity buffer,” the BSP said, noting that this is equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income.

The latest GIR is also some 7 times the country’s short-term external debt based on original maturity, and 4.4 times based on residual maturity.

Moody’s Investors Service last week affirmed the Philippine credit rating at ‘Baa2’ with a stable outlook, but flagged downside risks such as the country’s fiscal and government debt metrics. — RSJ, GMA News