BOP deficit widens to $436 M in Feb

MANILA, Philippines - The deficit in the country’s balance of payments (BOP) further widened in February as the country incurred shortfalls for the past five straight months amid the negative investor sentiment arising from uncertainties brought about by the normalization of interest rates in the US, the Bangko Sentral  ng Pilipinas (BSP)  reported yesterday.

Data released by the BSP showed the country incurred a BOP shortfall of $436 million in February, 73.7 percent higher than the $251 million deficit recorded in the same month last year.

The Philippines has been registering BOP deficits for the past five months with $183 million in October, $1.67 billion in November, $214 million in December, $9 million in January and $436 million in February.

This brought the BOP shortfall to $445 million in January and February, 58.2 percent lower than the $1.06 billion deficit recorded in the same period last year.

The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad.

A deficit means more money went out of the country while a surplus means otherwise.

BSP Deputy Governor Diwa Guinigundo expects an improvement in the country’s external payments position as the decision of the US Federal Reserve to raise interest rates for the second time in three months has reduced uncertainties.

The US Fed assured last week that further rate increases this year would be gradual.

“One hike this year and Fed officials sounded a little bit dovish and at the same time there will be two or three hikes. I think it also cleared the air of any uncertainty,” Guinigundo said.

For this year, the BSP expects a BOP surplus of $1 billion as foreign direct investments inflow is seen hitting $7 billion while the outflow of foreign portfolio investments or hot money is seen declining to $900 million.

Economic managers penned a GDP growth of between 6.5 and 7.5 percent this year amid robust private consumption and investments growth.

The economy accelerated by 6.8 percent last year from 5.9 percent in 2015.