THE Bangko Sentral ng Pilipinas (BSP) said the national government's payment of its external debt led to a $1.57-billion shortfall in the country's balance of payments (BoP) in June.
Although it narrowed from $1.60 billion in May of this year, it widened from the $312-million gap in June 2021.
The payments balance is a record of all trade and financial transactions that took place between entities in one country and the rest of the world within a specific time period. When a country imports more products, services and capital than it exports, it has a deficit; when it exports more, it has a surplus.
"The BoP deficit in June 2022 reflected outflows arising mainly from the national government's payments of its foreign currency debt obligations," the central bank noted in a statement.
The numbers show that the June shortfall led to a $3.10-billion gap in the first half of 2022, which is more than the $1.93-billion deficit from a year ago.
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"Based on preliminary data, this cumulative BoP deficit reflected the widening trade in goods deficit," the BSP pointed out.
The final gross international reserves at the end of June this year fell to $100.9 billion, which "represents a more than adequate external liquidity buffer equivalent to 8.4 months' worth of imports of goods and payments of services and primary income," it added.
Additionally, based on original maturity, it is roughly 7.1 times the country's short-term external debt and 4.5 times based on residual maturity.
The Bangko Sentral projects a bigger BoP gap this year after taking the rise in external risks into consideration. From a previous forecast of $4.3 billion, or -1.0 percent of the country's gross domestic product (GDP), the deficit is now anticipated to reach $6.3 billion this year, or -1.5 percent of GDP.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in a comment that the country's structural US dollar inflows, including exports, business process outsourcing revenues, foreign investments, foreign tourism revenues and Philippine Offshore Gaming Operations revenues, among others, have continued to grow and are offsetting the deficit in the payments balance.
"Risk of US economic slowdown or even recession amid more aggressive Fed (Federal Reserve) rate hikes and monetary normalization/tightening to bring down inflation toward the target of 2 percent, on top of the Russia-Ukraine conflict, could lead to increased volatility in the US/global/local financial markets that could lead to some pockets of market sell-off/net outflows as seen recently and slower growth in country's structural inflows such as OFWs (overseas Filipino workers) remittances, thereby could be a drag on both BoP and gross international reserves data," he warned.
However, Ricafort said sustained growth in the country's structural US dollar inflows amid efforts to further open the domestic and global economies toward greater normalcy, as well as investment banking or fund-raising activities that entail foreign investment inflows, would offset relatively larger trade deficits and some market volatility that could result in foreign portfolio investment outflows, serving as important catalysts for the payments balance.