LATEST data from the Bangko Sentral ng Pilipinas (BSP) show the balance of payments (BOP) reverting once again to a deficit in March after having posted a series of surpluses the previous three months.
The BOP in March, essentially a summary of the country’s transactions with the rest of the world, hit a deficit of $244 million, from a surplus aggregating $985 million surplus the previous months.
A BOP deficit is indicative of an economy whose foreign-currency earnings are insufficient cover of its foreign-currency expenses.
The BOP data in March represent the first such imbalance thus far this year. In November last year, the BSP reported a deficit totaling $314 million for the month.
Compared to March last year, however, the net deficit this year proved smaller than the March 2014 deficit of $340 million.
As a result, the first-quarter BOP position stood as a surplus of only $877 million, from the previous month’s surplus totaling $1.121 billion.
For the Philippines to hit the self-imposed surplus goal of $1 billion in the BOPs the central bank needs to post a surplus totaling $123 million in the months ahead.
Compared to the same three-month period last year, the first-quarter BOP position proved in a much better shape than the $4.475- billion deficit in the first quarter of 2014.
This was when markets were heavily affected by the so-called taper tantrum or the uncertainty over the magnitude and timing of the United States Federal Reserve’s (the Fed) rate normalization—which caused speculation and sentiment shift in markets across the globe.
This year, while BSP officials do not expect another taper tantrum due to the Fed’s sustained forward guidance, the central bank said it was not keen on revising the assumed numbers making up the BOP, as they remain cautious of shifts likely happening within the year.
“While the BOP for the first two months of 2015 looks promising because of good current- account and capital- and financial-account positions, we have to be very cautious of possible global growth risks and those that could trigger financial-market volatilities,” Deputy BSP Governor for the Monetary Stability Sector, Diwa C. Gunigundo said.