By Melissa Luz T. Lopez, Senior Reporter
THE PHILIPPINES saw continued dollar outflows in October, the Bangko Sentral ng Pilipinas (BSP) said, at a time of a weak peso and as the state settled more foreign debt.
The country’s balance of payments (BoP) position logged a $458-million deficit last month, albeit narrower than the $368-million gap last year and September’s $2.696-billion deficit which was the widest in four years.
The BoP measures the country’s transactions with the rest of the world at a given time. A deficit means more money fled the economy than what went in, while a surplus shows that more funds entered the Philippines.
The October deficit is the smallest seen since a $1.272-billion surplus in August.
The BSP attributed the second straight month in deficit to the government’s payments for external debts as well as net foreign currency withdrawals. The central bank’s interventions in the daily peso-dollar trading also contributed to the net outflows, it said in a statement yesterday.
The central bank taps its dollar reserves to temper sharp swings in the peso-dollar rate, as part of its “tactical intervention” to keep the currency competitive.
The local unit traded above P54 versus the dollar in early October, driving the monthly average weaker to P54.0086 versus the P51.3433 rate seen a year ago. The peso has since pared its losses going into November, with the unit back to the P52 to $1 level as of yesterday.
Gross international reserves totalled $74.71 billion in October, lower than the $74.939 billion level the previous month. The amount can cover up to 6.8 months’ worth of import duties, the central bank said.
On the other hand, a steady stream of income from the BSP’s offshore investments partly offset these money outflows.
Year-to-date, the BoP tally now stands at a $5.594 billion deficit, roughly triple the $1.735 billion shortfall recorded during the comparable 10-month period in 2017.
The figure is also well beyond the $1.5 billion deficit expected for the full year since the BSP’s review back in May.
In a statement, the central bank attributed the wider-than-expected deficit to a ballooning merchandise trade deficit due to a heavy importations of raw materials and capital goods seen to “support domestic economic expansion.”
Imports surged by 16.3% while exports slipped by 2.1% as of end-September, leaving the trade gap at $29.91 billion for the first nine months of 2018, according to preliminary data from the Philippine Statistics Authority.
Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, said the sustained BoP deficit was “expected” and will likely persist.
“This investment-led strategy by the government will continue to put pressure on the BoP. This is also being complicated by external environment pressures,” Mr. Asuncion said when sought for comment.
“The last two months may continue to look the same as the first 10 months of 2018.”

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