The Philippines recorded a deficit of $606 million in its transactions with the rest of the world in June, which is a narrower deficit compared to the $1.6 billion deficit in the same month last year. The Bangko Sentral ng Pilipinas (BSP) attributed the narrower deficit to the national government’s withdrawal of its foreign currency deposits with the BSP to settle debt obligations and pay for various expenses. This deficit in June was the widest among the three consecutive months of incurring a deficit from April to June.
However, the June results also brought the first-semester balance of payments (BOP) to a surplus of $2.26 billion, a turnaround from a deficit of $3.1 billion in the first half of 2022. The BSP attributed the surplus to inflows from personal remittances, net foreign borrowings by the national government, trade in services, and foreign direct investments.
Meanwhile, the gross international reserves (GIR) as of the end of June amounted to $99.4 billion, slightly lower than the preliminary figure of $99.8 billion. Despite the reduction, the GIR level still represents a more than adequate external liquidity buffer equivalent to 7.3 months’ worth of imports and four times the country’s short-term external debt.
Michael Ricafort, the chief economist at the Rizal Commercial Banking Corp., stated that the BOP position for the year continues to reflect a surplus, thanks to various factors such as the issuance of global bonds, inflows of remittances, revenues from business process outsourcing, and revenues from foreign tourists. Additionally, the government’s plan to raise $2 billion from the issuance of US dollar-denominated retail Treasury bonds in September is expected to help maintain a BOP surplus.
The BSP now expects the full-year BOP for 2023 to settle at a narrower deficit of $1.2 billion, an improvement from the $1.6 billion forecasted three months ago. Despite a string of monthly deficits, the BOP position remains positive for the year, demonstrating the country’s resilience in the face of global economic challenges. In 2022, the BOP recorded a deficit of $7.26 billion after three consecutive years of surpluses.
