The Philippines reported is largest balance of payments (BOP) deficit for the year in July on the back of the national government’s maturing foreign-exchange obligations, according to the Bangko Sentral ng Pilipinas (BSP).
Data from the Central Bank showed the country’s $678-million BOP deficit in July is the largest deficit recorded since November last year when it hit $1.67 billion.
The shortfall in July is also $109 million larger than the previous month’s deficit, a reversal of the $215-million surplus in the same month last year and is the third consecutive month that the country has incurred a deficit in its BOP.
The BSP attributed the higher deficit to foreign-exchange operations of the BSP and to payments made by the national government for its maturing foreign-exchange obligations during the review month.
The Central Bank said outflows during the month could have been larger, if not partially tempered by net foreign-currency deposits of the national government and BSP’s income from investments abroad.
“BSP’s foreign-exchange operations remained driven by increasing market demand for foreign exchange, largely to finance capital goods imports,” the Central Bank said.
The July deficit brought the total BOP deficit in the first seven months to $1.38 billion, significantly higher compared to the end-2016 deficit of $420 million, and a reversal of the $848-million surplus in the same seven-month period in 2016.
The BSP pegged its BOP projection for 2017 at $500-million deficit.
Thus, the BSP expects that the recovery in merchandise exports and higher-than-expected overseas remittances and
business-process outsourcing (BPO) revenues would mitigate the current account and the overall balance of payments for the whole of 2017.
Earlier, the BSP said it expects a stronger external payments position in the second half of the year on account of remittances, tourist receipts and BPO revenues.
The Central Bank also said the projected $500-million deficit for 2017 is still “doable”, citing expected influx of foreign direct investments in the second half of the year.