The Philippines’ balance of payments (BOP) recorded a $316-million deficit in February as the outward flow of dollars exceeded capital inflows due to the continuous settlement of the country’s debt to its foreign creditors, the Bangko Sentral ng Pilipinas reported over the weekend.
The February deficit is a 180-degree turn from a $985-million surplus in the same month last year, but an improvement from the $813-million deficit in January this year.
The BOP is the tally of a country’s commercial transactions with countries around the globe. A surplus would mean that the inflow of dollars and other foreign currencies exceed the outflows.
A deficit in the BOP, on the other hand, would decrease the country’s foreign exchange reserves, or gross international reserves (GIR). The GIR is a determinant of a country’s ability to pay for its imports and pay obligations to foreign debts.
BSP Deputy Governor Diwa C. Guinigundo said that the February deficit was attributable to the country’s continuing to settle its foreign obligations.
“[The deficit was] mainly as a result of debt servicing by the national government,” Guinigundo said.
“January [with a deficit of $813 million] was especially challenging due to some outflows, given the negative market sentiment following the expected US Fed (US Federal Reserve) tightening and China slowdown. February yielded a less negative BOP position with the resumption of capital inflows,” he added.
The BSP deputy governor said the central bank forecasts that the BOP will reverse to a $2 billion surplus for the full-year 2016 on robust overseas Filipino remittances and revenues from the thriving business process outsourcing (BPO) sector.
“We don’t expect the BOP deficit to persist through the end of 2016. Instead, we expect BOP to show around $2 billion in surplus on account of sustained current account surplus courtesy of remittances and BPO revenues,” Guinigundo said.
In 2015, money sent by OFWs exceeded BSP’s 4 percent growth target, increasing by 4.6 percent to $25.767 billion from $24.628 billion in 2014. The BPO sector also surpassed its revenue goal of $21 billion, earning a total of $22 billion in revenues from $18.9 billion in 2014.