THE Philippine balance of payments (BOP) reverted to a deficit in August from surpluses in the preceding month and the year-earlier period, reflecting the widest gap in 19 months.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed a $450 million deficit in August, the biggest deficit on record since $4.480 billion was posted in January 2014.
The August deficit is a turnaround from the $354 million surplus in July. It also reversed a $114 million surplus a year earlier.
The central bank did not explain how the BOP swung back to a deficit in August, but a key official noted the peso was at its weakest during the month as market speculated about the Fed rate hike and the developments in China.
“We have seen a significant depreciation of the peso relative to other currencies on account of the impending adjustment in the monetary policy in the US, the August 11 devaluation of the Chinese yuan, and the crash in the stock market on August 24,” BSP Deputy Governor Diwa Guinigundo said in a press briefing on Friday.
On the other hand, hot money or foreign portfolio investment in the Philippines registered $524 million in net outflow in August.
The BOP deficit in August trimmed the cumulative surplus in the first eight months to $1.588 billion from $2.038 billion in July.
Nevertheless, the BOP surplus in January to August was a complete turnaround from the $3.530 billion deficit a year earlier.
The central bank sees the payments position at a $2 billion surplus by year end or a reversal of the $2.88 billion deficit as of end-2014.
Q2 current account
In a separate report, the BSP said the current account surplus was narrower in the second quarter of 2015 as a result of a deficit in the wider trade-in-goods.
The current account posted a surplus of $2.805 billion April to June, reflecting a 10-4 percent decline from a $3.130 billion surplus a year earlier.
The BSP noted that the second quarter figure is equivalent to 3.8 percent of the country’s gross domestic product (GDP).
The current account is a major component of the BOP and consists of transactions in goods, services, primary income and secondary income. It measures the net transfer of real resources between the domestic economy and the rest of the world.
The trade in goods account, comprised of exports and imports of goods, posted a wider deficit of $3.547 billion compared with $2.384 billion a year earlier.
The trade in goods account deficit widened by 49 percent mainly on the 18.2 percent decline in merchandise exports, which more than offset a decrease in imports largely on lower oil imports as a result of weak oil prices in the international market.
The net services receipts account totaled $224 million, a reversal of the US$215 million net payments a year earlier.
“The marked improvement stemmed largely from increased net receipts in technical, trade-related and other business services, and computer services. Also contributing to the growth in net receipts from trade-in-services was the reversal of telecommunications services to net receipts from net payments along with lower net payments registered in travel, transport, financial, and government services.” the BSP said.
The primary income account recorded net receipts of $537 million in the second quarter, more than double the $221 million net payments a year earlier.
“This was on account largely of lower net payments of investment income attributed to increased net interest receipts on intercompany borrowings as well as lower net payments of dividends and reinvested earnings on foreign direct investments, combined with the 1.9 percent increase in compensation inflows from resident overseas Filipino workers which amounted to $1.9 billion during the quarter,” it said.
The net receipts of secondary income account, or current transfers between residents and nonresidents, expanded by 1.5 percent to $5.591 billion $5.508 billion a year earlier.