Latest central bank data showed that the BOP – the difference in total values between payments into and out of the country over a period – recorded a deficit of $404 million in June.
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BOP swings to $404-M deficit in June
Lawrence Agcaoili (The Philippine Star) - July 20, 2019 - 12:00am

MANILA, Philippines — The country’s balance of payments (BOP) registered a deficit in June, ending seven straight months of surpluses, due to substantial outflows stemming from the payment of foreign obligations by the national government, according to the Bangko Sentral ng Pilipinas.

Latest central bank data showed that the BOP – the difference in total values between payments into and out of the country over a period – recorded a deficit of $404 million in June.

“The substantial outflow in June 2019 stemmed from the principal and interest payments of the national government on its foreign exchange obligations,” the central bank said.

However, the latest deficit figure was significantly lower than the $1.18 billion deficit recorded in June last year.

According to the BSP, the outflow was partially tempered by the national government’s net foreign currency deposits as well as the BSP’s foreign exchange operations and income from its investments abroad.

A deficit means more foreign exchange flowed out of the country to pay for the importation of more goods, services, and capital than what flowed in from exports, remittances from overseas Filipinos, business process outsourcing earnings and tourism receipts.

Despite the strong outflows which resulted in a deficit in June, the country booked a BOP surplus of $4.79 billion in the first half, reversing the $3.26 billion deficit recorded in the same period last year.

“The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first five months and net inflows of foreign direct investments during the first four months,” the BSP said.

Latest data showed personal remittances from Filipinos abroad went up by 4.1 percent to $13.71 billion from January to May compared to the $13.17 billion recorded in the same period last year, while cash remittances coursed through banks increased by 4.5 percent to $12.35 billion from $11.82 billion.

On the other hand, FDI inflows declined by 14 percent to $2.9 billion in the first four months from $3.4 billion in the same period last year due to a sharp decline in equity inflows and faster rise in outflows.

The BSP now expects the Philippines to book a BOP surplus of $3.7 billion this year, reversing the $2.3 billion deficit recorded in 2018. The projected surplus this year is also a complete reversal of the projected BOP deficit of $3.5 billion as of November last year.

This despite the projected record current account deficit of $10.1 billion this year due to wider trade deficit.

The BSP sees a lower net FDI inflow of $9 billion this year and a higher net inflow of foreign portfolio investments of $4 billion.

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