THE country’s external payments position remained in deficit in July to incur the widest gap in eight months, driven by huge import volumes and foreign debt payments, the central bank reported over the weekend.

The Philippines’ balance of payments (BoP) position posted a $678-million deficit last month, larger than the $569-million gap posted in June and reversing the $215-million surplus in July 2016, the Bangko Sentral ng Pilipinas (BSP) said.

The BoP measures the country’s transactions with the rest of the world at a given time. A deficit means more funds fled the economy compared to what went in, while a surplus shows that more money entered the Philippines.

July’s outflow is the largest since the record $1.671-billion deficit posted in November 2016, and marks the third straight month the country’s balance of payments ended in the negative territory. The latest figure brought the seven-month tally to a deficit of $1.384 billion, against an $848-million surplus tallied during the comparable year-ago period.

In a statement, the BSP the wider gap came amid greater demand for dollars, reflecting increased importations and the settlement of external debt.

“The higher deficit was attributed to foreign exchange (FX) operations of the BSP and to payments made by the national government for its maturing FX obligations during the review month,” the statement read, which was released late Friday.

“BSP’s FX operations remained driven by increasing market demand for FX largely to finance capital goods imports.”

On the other hand, the BSP said the outflows posted in July were partially offset by net foreign currency deposits by the government, alongside a steady stream of income from the central bank’s offshore investments.

Despite the wider deficit, the central bank sees a bigger volume of funds entering the country later this year which would temper the sizeable outflows incurred so far.

“The BSP expects that the recovery in merchandise exports and higher-than-expected overseas remittances and BPO (business process outsourcing) revenues would mitigate the current account and the overall balance of payments for the whole year of 2017,” the central bank added.

The central bank foresees a $500-million BoP deficit this year, equivalent to 0.2% of gross domestic product (GDP). If realized, this will be slightly wider than the $420-million shortfall logged in 2016 at 0.1% of GDP.

OFW remittances totalled $13.813 billion as of end-June, up 4.7% from $13.192 billion and beating the central bank’s 4% growth estimate. BPO receipts also rose by 9.9% to $5.5 billion during the first quarter, according to BSP data. — Melissa Luz T. Lopez

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