THE Philippines’ external payments position saw a smaller deficit in March, but first-quarter gap was still bigger than a year ago, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
The country’s balance of payments (BoP) position settled at a $266-million deficit last month, improving from a $429-million deficit in February and a $550-million shortfall in March 2017.
March’s outflows sustained a deficit for the third straight month, but is the smallest since a $917-million surplus posted in December.
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 than what went in, while a surplus shows that more money entered the Philippines.
In a statement, the BSP said the outflows came as the central bank maintained a steady presence in the foreign exchange market. The monetary authority intervenes in the daily peso-dollar trading in order to temper sharp swings of the currency.
The peso averaged P52.0676 versus the greenback last month, compared to P51.7856 in February and P50.2752 a year ago, according to BSP data.
The deficit incurred last month also reflects payments made by the national government to settle foreign debt, the BSP said.
On the other hand, net foreign currency deposits held by the state as well as a steady stream of income from the BSP’s offshore investments helped offset these outflows.
The March BoP brought the first-quarter balance to a $1.227-billion deficit, bigger than the $994-million gap posted during the same period in 2017.
“The higher cumulative BoP deficit for the first quarter of the year may be attributed partly to the widening merchandise (trade) deficit for the first two months of the year,” the central bank said.
The country posted a $6.229-billion trade deficit as of end-February — 47% more than the $4.238 billion recorded in 2017’s first two months — as imports surged by 14.7% while exports edged up by a percent in the same comparative two-month periods, according to the Philippine Statistics Authority.
Analysts have flagged the widening deficit as a source of concern among investors since it weakens the peso further against the dollar.
However, central bank officials have said that the deficit is something to be expected from a growing economy, and should actually be regarded as positive since it is fueled by importation of capital goods and raw materials needed by businesses to expand.
The BSP expects the full-year BoP to settle at a $1-billion deficit for 2018, slightly wider than last year’s $863-million deficit but somewhat steady compared to the upward-revised $1.038-billion gap posted in 2016.
“We continue to expect the overall BoP position for the year to be very manageable,” the central bank added, noting that the Philippines has more than enough dollar reserves to cushion the impact of external shocks.
Gross international reserves reached $80.511 billion as of end-March, enough to cover 7.9 months’ worth of import payments. — Melissa Luz T. Lopez

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