THE PHILIPPINES posted a balance of payments (BoP) deficit in November, as more dollars flowed out of the country to pay for the government’s foreign debt and the trade deficit continued to widen.
Data released by the Bangko Sentral ng Pilipinas (BSP) late on Monday showed the BoP — the summary of the country’s economic transactions with the rest of the world within a given period — stood at a USD 756-million deficit last month. This was wider than the USD 123-million gap a year ago, and the biggest since the USD 2.34-billion gap in September.
“The BoP deficit in November 2022 reflected outflows arising mainly from the National Government’s payments of its foreign currency debt obligations and the BSP’s net foreign exchange operations,” the central bank said in a statement.
However, the November deficit was a reversal of the USD 711-million surplus in October that was largely brought about by the Marcos administration’s first bond issuance which raised USD 2 billion.
“BoP swung back to deficit with the National Government servicing foreign debt obligation all while the peso was starting to recover from its weakest levels,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
The peso rebounded to the PHP 56-a-dollar mark in November, closing the month at PHP 56.56 on Nov. 29, up by PHP 1.41 or 2.5% from its PHP 57.97 finish on Oct. 28.
In the 11-month period, the BoP posted a USD 7.9-billion deficit, a turnaround from the USD 353-million surfeit in the same 11 months of 2021.
“Based on preliminary data, this cumulative BoP deficit was due to the widening trade in goods deficit as goods imports continued to surpass goods exports on the back of the increase in international commodity prices and resumption in domestic economic activities,” the BSP said.
Latest data showed the trade deficit widened to USD 49.98 billion as of end-October, from the USD 32.40-billion gap a year ago. Imports rose 22.7% to USD 115.99 billion in the 10-month period, while exports grew by 6.3% year on year to USD 66.01 billion.
“The year-to-date levels, on the other hand, shows how imports growth are outpacing exports with local demand stronger during the holiday season, while external demand is dampened mostly by China’s lockdowns, US inflation, and global slowdowns,” Mr. Roces said.
BSP data also showed gross international reserves (GIR) reached USD 95.1 billion as of end-November, up 1.17% from USD 94 billion in the prior month.
The dollar buffers are enough to service 7.2 months’ worth of imports of goods and payments of services and primary income.
The GIR can also cover up to 5.8 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
“Moving forward, the BoP may remain in negative territory as external demand will remain down in the interim with our largest trading partner, China, just beginning to pivot towards looser curbs,” Mr. Roces said.
Earlier this month, China began dropping its “zero-COVID” policy,” which included strict lockdowns and testing. However, health experts said China may face a large wave of coronavirus infections in the next few months.
“For the coming months, especially in December, BoP data could still improve with the expected seasonal increase in the country’s structural inflows,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
He cited remittances from migrant Filipino workers, foreign tourism receipts, as well as revenues from business process outsourcing and Philippine Offshore Gaming Operators, among others.
The BSP earlier said it expects the country to post a wider BoP deficit this year as the global outlook is clouded with uncertainty.
The country’s BoP is now expected to end the year at a deficit of USD 11.2 billion or equivalent to -2.8% of gross domestic product (GDP), bigger than the previous projection of a USD 8.4-billion deficit (-2% of GDP) announced in September.
The BSP projected the GIR to hit USD 93 billion by end-2022 and by end-2023, lower than the September projections of USD 99 billion and USD 100 billion, respectively. — Keisha B. Ta-asan