The country’s balance of payments (BOP) surplus dipped to $2.866 billion as of end-May compared to $3.305 billion in end-April as the government paid for maturing loans.
Photo Insert: The BSP said the government’s net foreign currency withdrawals from its deposits with the former to pay for maturing loans and other expenses resulted in the higher deficit in May.
The Bangko Sentral ng Pilipinas (BSP) said the cumulative BOP surplus was “partly attributed to net inflows from personal remittances, net foreign borrowings by the NG (National Government), trade in services, and foreign direct investments.”
Based on preliminary data, the January to May BOP surplus reversed the $1.527-billion deficit in the same period in 2022. For the month of May alone, the BOP was in a shortfall of $439 million. This was higher than the previous month’s $148 million deficit. But it was lower than the same period last year of $1.606 billion.
The BSP said the government’s net foreign currency withdrawals from its deposits with the BSP to pay for maturing loans and other expenses resulted in the higher deficit in May.
The central bank also reported a final gross international reserves (GIR) level of $100.6 billion as of end-May which was lower than $101.8 billion end-April.
The GIR is still considered “more than adequate external liquidity buffer.” It is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. It is also about 5.8 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
The BOP, which is a summary of the economic transactions of a country with the rest of the world for a specific period, was revised last week for the 2023 and 2024 outlooks.
Last June 16, the BSP’s Monetary Board cut the deficit projection to $1.2 billion for 2023 versus its previous announcement of $1.6 billion in March.
For 2024, the central bank said it expects BOP will have a lower deficit of $500 million. The BSP said the emerging BOP forecasts for 2023 and 2024 “reflect mainly the slightly weaker global growth prospects for this year and the next”.
For this year, the overall BOP position is expected to be in shortfall due to a narrower merchandise trade gap, as goods imports growth is expected to slow down sharply following the pullback in international prices of major commodities, particularly fuel, said the BSP.
“Despite the optimism attached to the reopening of China’s economy, such a view remains tentative given its numerous domestic challenges, among which are declining property sales and real estate investment. Nonetheless, prospects for business process outsourcing and tourism industries remain positive, alongside stable remittance inflows from overseas Filipinos, providing support to the current account,” said the BSP.