BOP deficit narrows to $155 million in June

MANILA, Philippines — The Philippines recorded a balance of payments (BOP) deficit of $155 million in June, nearly 75 percent lower than the $606 million shortfall recorded in the same month last year, according to the Bangko Sentral ng Pilipinas (BSP).

However, last month’s deficit was a reversal of the $2 billion surplus recorded in May.

“The BOP deficit in June 2024 reflected outflows arising mainly from the national government’s payments of its foreign currency debt obligations,” the central bank said.

The BOP is the difference in total values between payments into and out of the country over a certain period. 

A deficit means that more dollars flowed out to pay for the importation of more goods, services and capital than what came in from exports, remittances from overseas Filipino workers, business process outsourcing earnings and tourism receipts.

With the huge shortfall in June, the country’s cumulative BOP surplus fell by 36 percent to $1.44 billion in the first half from $2.26 billion in the same period last year.

“The cumulative BOP surplus reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, trade in services, net foreign direct investments, net foreign borrowings by the national government and net foreign portfolio investments,” the BSP said. 

The latest data from the Philippine Statistics Authority showed that the country incurred a $4.6-billion trade deficit in May, which was 4.5 percent higher than the $4.4 billion shortfall in the same month last year.

However, the May trade gap was smaller than the $4.73 billion shortfall in April.

Exports slid by 3.1 percent to $6.33 billion from $6.53 billion a year ago, while imports eased to $10.93 billion from $10.933 billion. 

This translated to a 13-percent decrease in the trade deficit to $20.59 billion from January to May compared to $23.69 billion in the same period last year.

In the first five months of the year, exports rose by 7.8 percent to $30.84 billion from last year’s $28.61 billion, while imports slipped by 1.7 percent to $51.43 billion from $52.29 billion.

Meanwhile, the BSP said that gross international reserves (GIR) increased to $105.2 billion as of end-June from $105 billion as of end-May. 

The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods, payments of services and primary income.

It is also about six times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.

The BSP sees a BOP surplus of $1.6 billion (0.3 percent of the gross domestic product) this year. It also projects a BOP surplus of $1.5 billion (0.3 percent of GDP) in 2025.