April 2024 sees BOP shifting to deficit

The Philippines recorded a $639 million deficit in its balance of payments (BOP) position for April, according to data from the Bangko Sentral ng Pilipinas (BSP). This marks a significant reversal from the $1.17 billion surplus seen in March 2024.

The latest BOP figure is also higher than the $148 million deficit in March 2023. The BSP attributed the outflows to the national government’s net foreign currency withdrawals from its deposits with the BSP to settle foreign currency debt obligations and various expenditures.

The BOP tracks all economic transactions between a country and the rest of the world, encompassing goods, services, and capital. A surplus indicates more money entering the country than leaving, while a deficit signifies more money exiting than entering.

The April 2024 deficit brings the country’s year-to-date position to a $401 million deficit, a notable shift from the $3.3 billion surplus recorded from January to April 2023. The BSP stated that this cumulative deficit was primarily due to the government’s loan repayments and ongoing trade deficits.

The BOP position led to a decrease in gross international reserves (GIR) to $102.6 billion by the end of April, down from $104.1 billion the previous month. Despite the decline, the GIR remains a strong external liquidity buffer, equivalent to covering 7.6 months of imports and payments for services and primary income, as per the central bank.

Furthermore, the GIR is approximately 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 BSP’s assessment.

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