PH payments position swings back to deficit in April 2024

The Philippines’ balance of payments (BOP) position reverted to a deficit in April on the back of the government’s settlement of some of its foreign currency debt.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the country’s BOP position stood at a shortfall of $639 million last month, a reversal from the $1.173-billion surplus seen in March.

This was also higher than the $148-million BOP deficit seen in the same month last year.

The BOP consists of a country’s economic transactions with the rest of the world during a specific period, including trade in goods, services, and capital.

A surplus means more funds entered the country, while a deficit means more funds exited.

“The BOP deficit in April 2024 reflected outflows arising mainly from the national government’s net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the BSP said.

The BOP gap in April brought the year-to-date payments position to stand at a $401-million deficit, a turnaround from the $3.3-billion surplus recorded in the January-to-April-2023 period.

“Based on preliminary data, this cumulative BOP deficit reflected mainly the national government’s repayments of its foreign loans coupled with the continued trade in goods deficit,” the central bank said, noting that the trade deficit for January to March reached $11.2 billion, down from $14.5 billion shortfall in the same period in 2023.

Relatedly, the latest BOP position reflected a decrease in the country’s gross international reserves (GIR) level to $102.6 billion as of end-April from $104.1 billion as of end-March.

Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.

The GIR level is also about 5.8 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity, according to the central bank. —KBK, GMA Integrated News