Philippines posts higher dollar outflows in April

MANILA, Philippines — The amount of dollars that flowed out of the economy further swelled in April, putting the four-month tally above the government'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 (BOP) swung to a $270 million deficit in April, a reversal from the $917 million surplus recorded in the same month last year and wider than the $266 million gap in March.

Year-to-date, the country’s BOP position posted a higher shortfall of $1.497 billion, breaching the central bank's $1 billion deficit target for the entire 2018.

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.

The central bank attributed the bigger cumulative BOP deficit to the widening merchandise trade deficit for the first quarter of the year brought about by the sustained rise in imports to support domestic economic expansion.

Meanwhile, outflows in April “stemmed mainly from payments made by the national government for its maturing foreign exchange obligations and foreign exchange operations of the BSP,” the central bank said.

“These were partially offset, however, by income from the BSP’s investments abroad and net foreign currency deposits of the national government 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-April 2018, which stood at $79.609 billion.

The March GIR level is enough to cover 7.8 months’ worth of import payments and provides “more than ample liquidity buffer” for the economy against external shocks, the monetary authority added.

It is also equivalent to 5.4 times the country’s short-term external debt based on original maturity and 4.0 times based on residual maturity.