Balance of payments deficit in Q1 overshoots BSP's target

MANILA, Philippines — Deficit in the Philippines’ external payments position persisted in March 2018, putting the three-month tally above the central bank's full-year deficit ceiling on the back of ballooning trade gap.

Data released by the Bangko Sentral ng Pilipinas show the country’s overall balance of payments position, or BOP, swung to a $266 million deficit in March, slimmer than the $429 million gap in February and the $550 million deficit recorded in the comparable period last year.

For the first quarter, the country’s BOP position registered a gap of $1.227 billion, breaching the central bank's $1 billion deficit target for the entire 2018. It was also higher than the $994 million shortfall in the first three months of 2017.

The wider quarterly BOP gap could be attributed to the swelling merchandise deficit in the first two months of the year, the BSP said, adding that the country’s BOP position is nonetheless expected to be “very manageable.”

READ: Trade gap widens in February as exports fall for first time since 2016

The BOP measures the Philippines’ international transactions during a period. A surplus arises when more funds entered the country against those that left, while a deficit is incurred when outflows exceed inflows.

When inflows and outflows are equally matched, the BOP position is in balance.

“Outflows in March 2018 stemmed mainly from foreign exchange operations of the BSP and payments made by the National Government for its maturing foreign exchange obligations,” the central bank said.

“These were partially offset, however, by net foreign currency deposits of the National Government and income from the BSP’s investments abroad during the month,” it added.

The central bank then assured the public that the reported BOP position is “consistent” with the economy’s gross international reserves level as of end-March 2018, which stood at $80.511 billion.

The March GIR level is enough to cover 7.9 months’ worth of import payments and provides “more than ample liquidity buffer” for the economy against external shocks, the monetary authority added.