THE PHILIPPINES’ balance of payments (BoP) deficit narrowed to $216 million in November from the $756-million gap a year ago, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
“The BoP deficit in November 2023 reflected outflows arising mainly from the National Government’s (NG) payments of its foreign currency debt obligations,” the BSP said in a statement.
On a month-on-month basis, the BoP position swung to a deficit from the $1.5-billion surplus recorded in October.
The BoP deficit in November was also the smallest since the $57 million in August.
The BoP measures the country’s transactions with the rest of the world at a given time. A deficit means more funds fled the economy than what went in, while a surplus shows that more money entered the Philippines.
“The US dollar-Philippine peso exchange rate was lower in November at P55.81 (vs P57.65 in the same period last year) and this may have been the significant reason for the narrowing of the deficit for the period,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
Mr. Asuncion said the narrower BoP deficit reflected recent trade data.
“We must also understand that in terms of merchandise imports, (it) has been on the declining trend from lower global oil prices. Moreover, the exports side continues to be challenged by the current weak external trade environment. These combined factors are seemingly contributing to the narrower BoP deficit,” he said.
In the first 10 months, the trade gap narrowed by 11.9% to $44.07 billion. This as exports declined by 7.8% to $60.91 billion and imports fell by 9.6% to $104.97 billion.
The Development Budget Coordination Committee (DBCC) expects goods exports and imports to contract by 4% and 3%, respectively, this year.
In the first 11 months, the BoP position stood at a surplus of $3.03 billion, a turnaround from the $7.875-billion deficit in the same period in 2022.
“Based on preliminary data, this development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the National Government,” the central bank said.
The BSP said net inflows from foreign direct investments also contributed to the surplus.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the BoP surplus in the January-November period was due to the NG’s recent foreign borrowings.
The government raised $1 billion from its maiden offering of Sukuk bonds in late November.
At its end-November position, the BoP reflected a final gross international reserve (GIR) level of $102.7 billion. This was 1.7% higher than $101 billion as of end-October.
The GIR was enough to cover six times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.
It also represents 7.6 months’ worth of imports of goods and payments of services and primary income.
For the coming months, Mr. Ricafort said that the country’s BoP position could be further supported by growth in cash remittances, revenues from business process outsourcing firms, foreign direct investments, and a narrower trade deficit.
“Going forward, any improvement in BoP data and in GIR data for the coming months could help provide a greater cushion for the peso exchange rate against the US dollar especially versus any speculative attacks,” he added.
This year, the BSP is expecting the BoP to end with a surplus of $1.1 billion, equivalent to 0.2% of gross domestic product. — Luisa Maria Jacinta C. Jocson
