Euro Canals News

Your most trusted news channel

THE Philippines lost more than a billion dollars in its transactions against the rest of the world in May this year, due largely to foreign currency debt repayments during the month. 

The Bangko Sentral ng Pilipinas (BSP) reported on Tuesday that the country’s balance of payments (BOP) hit a deficit of $1.61 billion in May this year, about four times the deficit seen in the previous month of $415 million.

The May deficit is also larger than the $1.34-billion deficit seen in the same period last year. 

The BOP is usually considered as an important economic indicator in an economy as it shows the level of earnings or expenses of the Philippines in its transactions with the world. A deficit means that the country had more dollar expenditures than its dollar earnings during a given period. 

“The BOP deficit in May 2022 reflected outflows mainly from the National Government’s [NG] foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the Central Bank said in a statement.

May’s deficit brought the cumulative BOP level for the first five months of 2022 to a $1.53-billion deficit, lower than the $1.63-billion deficit recorded in the same period a year ago. 

“Based on preliminary data, this cumulative BOP deficit reflected the trade in goods deficit,

which was partly offset by inflows such as from personal remittances, net foreign borrowings by the NG, foreign direct and portfolio investments,” the BSP said. 

Just last week, the BSP said the country’s overall BOP is expected to register a wider- than-expected deficit due to the buildup in external risks. 

The emerging 2022 overall BOP position is projected to post a higher deficit of $6.3 billion from the previous forecast of a $4.3 billion deficit.

“The emerging BOP outlook for 2022 and 2023 remains quite circumspect in view of the recent buildup in external risks. Of note is the downgraded global growth outlook following the escalation of the Ukraine-Russia conflict and its international ramifications, most notably the increase in food and fuel prices,” the BSP earlier said in a statement. 

“The anticipated slowdown of China’s economy could also put pressure on trade prospects. Meanwhile, capital flows could be particularly volatile following the abrupt monetary policy normalization in the US and in other major economies,” it added.

Image credits: Nonie Reyes