Third quarter BOP registers deficit: central bank

December 14, 2018

The country’s balance of payments position (BOP) registered a higher deficit of $1.9 billion in the thrd quarter compared to the $662 million deficit in the same quarter a year ago, the Bangko Sentral ng Pilipinas ( BSP) said Friday.

This development was primarily due to the deficit in the current account, which was a result of the continued widening of the trade-in-goods deficit and the lower net receipts of services and secondary income.

The increase in the primary income account tempered the rise in the current account deficit.

The sustained expansion in imports of goods was driven by strong growth of domestic economic activity propelled by the government’s big infrastructure projects.

Meanwhile, the financial account recorded net inflows (or net borrowing by residents from the rest of the world), a reversal from the net outflows posted in the same quarter a year ago.

Net inflows of direct investments remained robust on the back of country’s solid macroeconomic fundamentals.

Net inflows were likewise posted in the portfolio and other investment accounts during the quarter as investor sentiment and global growth prospects remained positive.

As a result of these developments, gross international reserves amounted to $74.9 billion as of end-September, lower than the $81 billion level recorded in end-September 2017.

At this level, reserves may sufficiently cover 6.6 months’ worth of imports of goods, and payments of services and primary income.

It was also equivalent to 5.6 times the country’s short-term external debt based on original maturity and 4.0 times based on residual maturity.

The year-on-year decrease in reserves was due mainly to outflows arising from the BSP’s foreign exchange operations, the national government’s payments for its foreign exchange obligations, and revaluation losses on foreign currency-denominated reserves and gold holdings. DMS