By Melissa Luz T. Lopez
Senior Reporter
THE COUNTRY’s balance of payments (BoP) position will continue to post deficits in at least the next few months amid a continued surge in imports of goods, but some investment inflows will likely help narrow the gap in the near term, analysts said.
The Philippines’ external payments position swung to a $2.696-billion deficit last month, reversing from a $1.272-billion surplus in August and the narrow $24-million surfeit in September 2017.
The BoP measures the country’s transactions with the rest of the world at a given time.
A deficit means more funds left the economy than what went in, while a surplus shows that more money entered the Philippines.
This is the biggest gap in over four years and pushed the nine-month balance to a deficit of $5.136 billion, versus the $1.5-billion deficit expected by the Bangko Sentral ng Pilipinas (BSP) for the entire 2018.
The central bank attributed the continued outflows to payments made by the national government for maturing foreign debt, as well as the BSP’s regular foreign exchange operations to defend the peso, which traded weaker than P54 against the greenback during the month.
Economists sought for comment said the BoP will likely remain under pressure in the months ahead amid heavy importations and weak export receipts.
“The BoP will likely remain in deficit, but we do see some improvement emanating from flows into the financial account,” Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said in an e-mail, referring to the BoP component consisting of direct portfolio and other forms of investment.
Mr. Mapa said plans for a fresh dollar bond sale by the Bureau of the Treasury could boost inbound investments and equity inflows. “With the Philippines moving into an investment phase of its growth, we may likely have to rely more on the financial account for funding as the current account remains in the red for now,” he added.
Imports grew by 15% while exports slipped by two percent as of end-August, leaving the trade gap at $26.003 billion in the eight months to August, according to preliminary data from the Philippine Statistics Authority.
Deputy Treasurer Erwin D. Sta. Ana told reporters yesterday that the government is “on track” to issuing fresh bonds to foreign investors this quarter, with a team of officials on a road show in the United States over the past week.
Michael L. Ricafort, economist at the Rizal Commercial Banking Corp., has said that BoP deficits will continue on the back of a bigger oil import bill as world crude prices remain elevated.
However, the recent softening in oil prices as well as stronger remittances for the holidays may provide support to the BoP and the peso.

RELATED ARTICLESMORE FROM AUTHOR