Debt payments leave Philippines’ dollar position stewing in deficit in November

MANILA, Philippines — The Philippines dug itself into a deeper dollar deficit in November as foreign currency swings sent the national government’s debt payments in pricey territory. 

The country’s balance of payments (BOP) amounted to a deficit of $756 million in November, wider compared with the $123 million deficit a year ago, the Bangko Sentral ng Pilipinas reported on Tuesday.

This dollar deficit reversed the outturn in October, when it landed a surplus of $711 million.

Year-to-date, the BOP incurred a $7.88 billion deficit.

The BOP is a summary of the country’s transactions with the world for a specific period of time. A deficit happens when foreign fund outflows exceed inflows.

The BSP raised its projection for the BOP position to hit $11.2 billion deficit this year, higher compared to the central bank’s previous forecast of $8.4 billion deficit.

In November, the BSP credited the shortfall to “the National Government’s payments of its foreign currency debt obligations and the Bangko Sentral ng Pilipinas’ net foreign exchange operations.”

Domini Velasquez, chief economist at China Banking Corp., expects remittances to lift the BOP position. As it is, overseas Filipinos send in remittances in bunches to their families here at the advent of the holiday season.

“Moving forward, the BOP position may be boosted by holiday remittances and the narrowing of the trade deficit,” she said in a Viber message. 

“However increasing uncertainty, with advanced economies sliding into recession, may curtail investment inflow to the country,” Velasquez added.

The country’s dollar reserves improved to $95.1 billion as of end-November. The level represents a buffer equivalent to 7.2 months’ worth of imports of goods and services. It’s about 5.8 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.