December 2018 surplus trims Philippines’ full-year net dollar outflows
MANILA, Philippines — More dollars flowed into the domestic economy last December, helping pare the country’s balance of payments deficit for the whole 2018, the Bangko Sentral ng Pilipinas reported Friday.
The Philippines’ balance of payments position logged a $2.44 billion surplus in December, higher than $917 million surplus recorded in the same month in 2017. The December tally is the largest since a $3.18-billion surplus in July 2012.
The inflows last month stemmed mainly from the BSP’s foreign exchange operations, the government’s net foreign currency deposits and the central bank’s income from its investments abroad during the month. However, these were partially offset by payments made by the state for its foreign obligations.
The last-minute spike in dollar inflows in December brought the country’s full-year BOP position to a $2.31-billion deficit, lower than the BSP's forecast of $5.5-billion deficit for 2018 but wider than the $863 million gap posted in 2017.
“The higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise trade deficit for the first eleven months of the year that was brought about by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion,” the BSP said.
The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period.
A surplus arises when more funds entered the country against those that left. The raised funds go to the nation’s international reserves, which the BSP manages as the lender of last resort.
Meanwhile, a deficit is incurred when outflows exceed inflows. When inflows and outflows are equally matched, the BOP position is in balance.
The country’s yawning BOP deficit comes at a time when President Rodrigo Duterte needs more dollars to fund his administration’s ambitious infrastructure program, which has been widening the country’s trade gap due to high demand for imports of construction-related goods.
According to the BSP, the Philippines’ final gross international reserves level stood at $79.19 billion as of end-December, providing “more than ample liquidity buffer” and is equivalent to seven months’ worth of imports of goods and payments of services.
The international reserves are composed of foreign assets of the BSP held mostly as investments in foreign-issued securities, monetary gold and foreign exchange.
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