MORE DOLLARS fled the country in January, resulting in a deficit in the balance of payments (BoP) as the country paid off foreign debt obligations, the Bangko Sentral ng Pilipinas (BSP) said.
The BoP posted a $752-million deficit after 11 straight months of surfeit, data released by the BSP on Wednesday evening showed. However, the deficit was smaller than the $1.355-billion gap in January 2020.
“The BoP deficit in January 2021 reflected outflows mainly from the foreign currency withdrawals of the National Government from its deposits in the BSP to pay its foreign currency debt obligations,” the BSP said in a statement.
Data from the Bureau of the Treasury showed the country’s foreign debt stock as of December included loans worth P1.312 trillion and P1.7888 trillion in government securities issued offshore.
Meanwhile, the central bank’s foreign exchange operations and its income sourced from investments abroad partially offset the outflows.
The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit means more funds exited the country than what went in, while a surplus shows that more money entered the Philippines.
The January BoP position reflects the country’s gross international reserves (GIR) which stood at $108.67 billion as of end-January, which is enough buffer to cover 11.6 months’ worth of imports of goods and payments of services and primary income, the BSP said.
It is also equivalent to 9.4 times of the country’s short-term external debt based on original maturity and five times based on residual maturity.
The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. — Luz Wendy T. Noble