MANILA, Philippines – More dollars flowed out of the Philippine economy than they came in May when the government repaid some of its overdue loans from abroad, reversing the net inflow recorded in the same period last year, according to the central bank.
In a statement, Bangko Sentral ng Pilipinas (BSP) said that the country’s total balance of payments position had a deficit of 1.4 billion. $ May 2021, marking a turnaround from that surplus of $ 2.43 billion. $, Registered in May 2020.
“The balance of payments deficit in May was mainly attributed to outflows due to the national government withdrawing foreign currency from its deposits in BSP as [it] settled its debt obligations in foreign currency and paid for various expenses, ”said the central bank.
However, these outflows were partially offset by the inflow from BSP’s foreign exchange transactions and from the national government’s external loans deposited with the central bank.
The balance of payments is the net number of all dollar transactions made by the country’s economy with the rest of the world. A profit means that the economy earns more dollars than it spends, but it can also mean that it does not spend enough on imported raw materials needed for growth. A deficit, on the other hand, means that the country spends more than it earns.
According to the central bank, the cumulative balance of payments position for the period January-May 2021 recorded a deficit of $ 1.63 billion, which is a reversal of the surplus of $ 4.03 billion recorded in the same period a year ago.
Based on preliminary data, this cumulative deficit was partly attributed to the broader trade deficit on commodities and the net outflow of foreign portfolio investment.
The position of the balance of payments reflects a decline in the final gross international reserves level to $ 107.25 billion. At the end of May 2021 from $ 107.71 billion. At the end of April 2021 and from $ 110.12 billion. At the beginning of the year.
“The latest dollar reserve level represents a more than adequate external liquidity buffer equivalent to 12.2 months of imports of goods and payments of services and primary income,” said the central bank, adding that it is also about 7.9 times the country’s short-term external debt based at original maturity and 5.2 times based on residual maturity.
Last week, the central bank predicted that dollar flows to the Philippines from abroad will yield a larger surplus this year than originally expected as exports begin to recover, but weak economic activity will continue to curb imports.
BSP officials have revised their most recent estimated balance of payments surplus for 2021 to $ 7.1 billion. $ Or 1.8 percent of gross domestic product. This is higher than the full-year projection of $ 6.2 billion, which was set by the Monetary Board in March last year, but significantly lower than the record-high BOP profit of $ 16 billion. Dollars for the whole of last year as the economic downturn shrank imports and investment.
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