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Philippines: BoP reverts to shortfall in Nov
THE national government’s external debt payments dragged the country’s balance of payments (BoP) into a deficit of $123 million in November, according to the Bangko Sentral ng Pilipinas (BSP). The outcome, announced on Tuesday, reversed a $1.47-billion surplus in November 2020 and erased a $1.14-billion surplus in October of this year. It was also the largest shortfall since September, when the payments situation was $412 million in the red.
The payments balance is a record of all trade and financial transactions that took place between entities in one country and the rest of the world within a specific time period. When a country imports more products, services and capital than it exports, it has a deficit; when it exports more, it has a surplus.
“The BoP deficit in November 2021 reflected outflows arising mainly from the national government’s (NG) foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures,” the central bank noted in a statement.
According to the current monthly statistic, the November gap reduced the payment balance surplus in the first 11 months of this year to only $353 million, which is still less than the $11.78-billion surplus in the same time of 2020.
“This cumulative BoP surplus reflected inflows such as from personal remittances, trade in services, net foreign borrowings by the NG and foreign direct investments [FDI], which were partly offset by a wider trade in goods deficit,” the Bangko Sentral mentioned.
In the first 10 months of this year, personal remittances — cash or in-kind transfers between families — grew by 5.4 percent to $28.81 billion.
For the 10 months ending in October 2021, the government’s net foreign borrowings were P294.78 billion. On the other hand, net FDI inflows reached $7.28 billion in the first nine months of this year.
The government’s net foreign borrowings for the 10 months ending October 2021 was P294.78 billion. Net inflows of FDIs, on the other hand, totaled $7.28 billion in January-September of this year.
According to the BSP, the BoP’s position at the end of November showed a lower final gross international reserves level of $107.72 billion, but that it still “represents a more than adequate external liquidity buffer equivalent to 10.2 months’ worth of imports of goods and payments of services and primary income.” It is also 8.7 times the country’s short-term external debt in terms of original maturity and 5.7 times in terms of residual maturity. The Bangko Sentral cut its prediction for the country’s payments balance surplus this year from $4.1 billion to $1.6 billion.
“The latest BoP assessment for 2021 factors in pockets of optimism amid encouraging economic outturns in recent months on the one hand and the continued high uncertainty from pandemic-related challenges on the other hand,” it underscored.
According to Michael Ricafort, chief economist of Rizal Commercial Banking Corp., the BoP data should improve due to a seasonal boost in remittances from overseas Filipino workers, as well as an increase in various corporate fund-raising operations for the economy’s reopening.
However, he noted it could be offset by the recent widening trend of the country’s trade deficit, which could be offset by any additional measures to further reopen the economy, as well as the country’s import bill and trade deficit being bloated by still high global oil prices, particularly during winter.
Source: https://www.manilatimes.net/2021/12/22/business/top-business/bop-reverts-to-shortfall-in-nov/1826796