THE country’s balance of payments position in May 2017 reversed to a deficit of $59 million from a surplus of $241 million a year ago, driven mainly by the government’s payment of maturing foreign exchange obligations, data from Bangko Sentral ng Pilipinas on Monday show.
“(The deficit was) mainly due to foreign exchange operations of the BSP and foreign exchange payments by the national government on its maturing obligations even as these were cushioned by FX deposits by NG and investment income of BSP from abroad,” Bangko Sentral Deputy Governor Diwa Guinigundo said in a statement.
“These bookings must have been driven by merchandise trade as imports continue to increase on account of good growth numbers and outflows in the foreign portfolio account,” he said.
The May deficit was also a reversal of the $917-million surplus recorded a month ago. The May figure brought the balance of payments in the first five months to a deficit of $136 million, a turnaround from a $216-million surplus in the same period last year.
The balance of payments summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments exceed inflows. A BoP deficit affects the value of the peso against the US dollar and eats into the country’s gross international reserves.
Guinigundo on Friday announced that the regulator revised its BoP position projection this year to a deficit of $500 million from the earlier assumption of a $1-billion surplus made in December last year, on the back of the subdued outlook for emerging market economies and possible impact of the policies of US President Donald Trump.
The projected deficit is expected to result in gross international reserves of $80.5 billion in 2017, lower than the previous projection of $84.7 billion.
Guinigundo said monetary authorities also considered the upward revision of the global growth this year, recovery of the global trade, China growth outlook which could be at risk with high debt load, and the pace of the monetary policy tightening in the US in the new assumptions.
Guinigundo said global growth this year was seen at 3.5 percent, higher than the 3.1 percent in 2016.
He cited the firming of commodity prices and strong domestic growth prospects. “We hope that the numbers will continue to improve as the year unfolds, especially in the second half of the year,” Guinigundo said.
He said the positive global growth prospects could result in higher exports this year by $5 billion from the earlier assumption of $2 billion. Import growth, meanwhile, was maintained at $10 billion.
The BoP posted a deficit of $994 million in the first quarter of 2017, higher than the $210-million deficit a year ago. The current account reversed to a deficit of $318 million from a $730-million surplus a year ago, as the trade in goods deficit widened on the back of the faster growth in imports.
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