BOP posts $863m deficit for 2017 despite surplus in fourth quarter

March 16, 2018

The Philippines’s balance of payments position (BOP) rebounded in the fourth quarter of 2017, yielding a surplus of $505 million, after recording a deficit of $662 million in the third quarter of 2017, the Bangko Sentral ng Pilipinas (BSP) said Friday.

For the full year, the BOP registered a deficit of $863 million, more than double the US$420 million deficit recorded in 2016, the central bank added.

The BOP full year deficit was " underpinned mainly by the increased deficit in the current account during the year, despite the reversal in the financial account to net inflows from net outflows in the previous year."

The current account deficit of $2.5 billion stemmed mainly from the widening trade-in-goods deficit due to increased imports of goods that support domestic capital formation and production, the central bank added.

The financial account posted $2.2 billion net inflows due to a surge in net inflows of direct investments, which more than compensated for higher net outflows of portfolio investments, even as net outflows of other investments declined significantly during the year.

Gross international reserves  increased to $81.6 billion as of end-December 2017, from $80.7 billion as of  end-December 2016. At this level, reserves could adequately cover 8 months’ worth of imports of goods and payments of services and income. It was also equivalent to 5.7 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity. DMS