By Lee Chipongian
The Bangko Sentral ng Pilipinas (BSP) reported a balance of payments (BOP) deficit of $5.59 billion as of end-October, mirroring the trade gap due to higher import demand.
The BOP shortfall was higher than same time last year of $1.73 billion deficit.
For the month of October only, the deficit was $458 million which was lower than Septembers $2.70 billion deficit. The September deficit was the highest monthly deficit for 2018. Last year, for October, the deficit was $368 million.
In a statement, the BSP said the higher deficit was “partly to the widening merchandise trade deficit based on the Philippine Statistics Authority’s preliminary data, for the first three quarters of the year. This, in turn, was brought about mainly by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion.”
In October, the BSP said the shortfall – albeit lower than the previous month – came from payments made by the National Government (NG) for its foreign exchange obligations, NG’s net foreign currency withdrawals and foreign exchange operations of the BSP. “These were partially offset, however, by the BSP’s income from its investments abroad,” it added.
The BSP also reported the final gross international reserves (GIR) number which as of end-October, was at $74.71 billion. The central bank releases a preliminary GIR data every first week of every month.
The BSP said the current GIR level is “more than ample liquidity buffer”. It is equivalent to 6.8 months’ worth of imports of goods and payments of services and primary income. It is also 5.7 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.
The BSP has a BOP deficit estimate of $1.5 billion for this year. This forecast is currently under review by the Monetary Board. In 2017, the BOP deficit reached $863 million.