Phl incurs $79-M payments deficit in April

MANILA, Philippines - The country’s balance of payments (BOP) position posted a deficit for the second straight month in April as the government paid more maturing foreign obligations, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. Data released by the BSP yesterday showed that the Philippines incurred a BOP deficit of $79 million in April, reversing a $1.08 billion surplus booked in the same month last year. Last month’s BOP deficit was lower than the $209 million shortfall booked in March. BSP Governor Amando Tetangco Jr. said in a text message to reporters that the “small” deficit in April could be attributed to the payments made by the government of its maturing obligations as well as the losses incurred by the central bank in its foreign exchange transactions. However, data showed that the country’s BOP position booked a surplus of $1.164 billion from January to April this year or 75 percent lower than the $4.577 billion booked in the same period last year. “The cumulative BOP for the first four months remains in a healthy surplus,” Tetangco stressed. The BOP position refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world. The country’s BOP surplus fell 28.8 percent to $10.179 billion last year from $14.308 billion in 2010 due to the sudden reversal of foreign capital inflows towards the end of the year amid the contagion from the fragile economic recovery in the US as well as the sovereign debt crisis in Europe. The BSP chief said monetary authorities would continue to monitor global developments in order to assess the impact on the country’s external payments position. “We are watching global developments to see how these would affect traditional drivers of the BOP,” Tetangco added. The BSP sees the country’s gross international reserves (GIR) hitting a record level of $79 billion this year. The end-2011 GIR reached $75.302 billion and was lower than the revised full-year target of $76 billion. The country’s foreign exchange reserves grew 10.9 percent to $75.965 billion in the same period this year from $68.488 billion in end-April last year due to higher valuation of the central bank’s gold holdings and its robust earnings from the overseas investments. The GIR is the sum of all foreign exchange flowing into the country. The end-April GIR level could cover 11.4 months worth of imports of goods and payments of services and income as well as 10.8 times the country’s short-term external debt based on original maturity and 6.4 times based on residual maturity. The strong external payments position gives the country enough buffer to survive external shocks arising from the economic uncertainties in advanced economies led by the US as well as the sovereign debt crisis in Europe. - By Lawrence Agcaoili