The Philippines’ balance of payments (BOP) slipped back into a deficit in June from a surplus in May, and deeper into negative territory for the year to date or the end of the first half.
Official central bank data shows a $24 million payments deficit for June, reversing the $373 million surplus posted in May, as well as the surplus of $692 million recorded a year earlier.
The Bangko Sentral ng Pilipinas (BSP) released the figures on Friday without offering any explanation for the nearly $400 million reversal of the BOP accounts in the month from May to June.
Gains posted this year – February and May – have been attributed to positive management of the central bank’s foreign exchange operations and higher exports, while deficits can be traced to government payments of foreign-denominated debt obligations, unfavorable exchange rate fluctuations, or declines in exports.
June export figures have not yet been released, but the country’s export position improved in May, recording 6.9 percent growth year-on-year, following a moderate gain of 1.3 percent in April.
Cumulative position negative
The cumulative BOP position for the first six months of the year remained in negative territory at -$4.14 billion, a slightly deeper deficit compared to the -$4.12 billion cumulative position at the end of May. Year-to-date, the BOP is a stark reversal of the $2.58 billion surplus registered in the first half of 2013.
In contrast to 2013, in which the BOP registered a monthly surplus in all but two months, 2014’s balance of payments appears to be unusually volatile, with deficits recorded in four out of the first six months of the year, and only partially offset by healthy surpluses in February and May, according to BSP data.
The balance of payments summarizes the country’s economic transactions with the rest of the world over a certain period. It consists of the current account, the capital account, and the financial account.
A surplus arises when foreign exchange inflows are greater than outflows, while a deficit is incurred when outflows exceed the inflows, causing a drop in the country’s gross international reserves.
For this year, the BSP is targeting a payments surplus of $1.1 billion, equivalent to 0.3 percent of the country’s gross domestic product. In 2013, the cumulative BOP stood at a surplus of $5.09 billion.