By Luz Wendy T. Noble, Reporter
The country’s balance of payment (BoP) posted a deficit in April as the government continued to pay for its foreign debt obligations, and as the trade deficit widened due to the rising value of imports.
Data released by the Bangko Sentral ng Pilipinas late Thursday showed the BoP stood at a $415-million deficit, a reversal from the $2.614-billion surplus a year ago as well as the $754-million surfeit in March.
The deficit was the biggest since the $157-million gap in February.
“The BoP deficit in April 2022 reflected outflows mainly from the National Government’s (NG) foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures,” the central bank said in a statement.
Latest data from the Bureau of the Treasury showed the March debt service bill fee declined 75% to P67.39 billion in March from a year earlier. Of the P11.84 billion for principal payments, 63.5% or P7.53 billion were for foreign obligations.
The BoP deficit also reflected the increasing trade gap due to the rising import bill, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The trade deficit nearly doubled to $5 billion in March from a $2.759-billion gap a year earlier. This was driven by the 27.7% increase in imports to $12.175 billion, which outpaced the 5.9% growth in exports to $7.171 billion.
The BoP as of end-April reflects final gross international reserves (GIR) of $105.4 billion, down 1.77% from $107.31 billion a month prior.
Despite the decline, the dollar buffer is enough to service 9.3 months’ worth of imports of goods and payments of services and primary income.
The GIR can also cover up to 6.7 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity.
The BoP depicts a picture of the country’s transaction with the global economy. A deficit means more funds left the country, while a surplus shows that more money came in.
For the January to April period, the BoP posted a $79-million surplus, a turnaround from the $231-million deficit in the same four months of 2021.
“Based on preliminary data, the cumulative BoP surplus reflected inflows that stemmed mainly from personal remittances, net foreign borrowings by the NG, and foreign direct investments,” the central bank said.
The ongoing Russia-Ukraine war remains a risk to the country’s BoP as it has caused the continued increase in global oil and commodity prices, Mr. Ricafort said. This is crucial as the Philippines is a net oil importing country.
“Russia’s war with Ukraine could further lead to wider trade deficits, thereby a challenge on the BoP data, going forward,” Mr. Ricafort said.
On the other hand, amendments to the Public Service Act, Foreign Investment Act, and the Retail Trade Liberalization Act could encourage more foreign investment inflows into the country.
The BoP is expected to post a $4.3-billion gap in 2022, based on BSP projections. This is equivalent to 1% of the gross domestic product.