BOP posts US$1.61 billion deficit in May 2022

The country’s overall balance of payments (BOP) position posted a deficit of US$1.61 billion in May 2022, higher than the US$1.4 billion BOP deficit recorded in the same month last year.

The BOP deficit in May 2022 reflected outflows mainly from the National Government’s (NG) foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures.

The BOP deficit in May brought the cumulative BOP level for January-May 2022 to US$1.53 billion deficit, lower than the US$1.63 billion deficit recorded in the same period a year ago.

Based on preliminary data, this cumulative BOP deficit reflected the trade in goods deficit, which was partly offset by inflows such as from personal remittances, net foreign borrowings by the NG, foreign direct and portfolio investments.

The gross international reserves (GIR) level declined to US$103.65 billion as of end-May 2022 from US$105.4 billion as of end-April 2022.

Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.7 months’ worth of imports of goods and payments of services and primary income.^[1]

Moreover, it is also about 7.4 times the country’s short-term external debt based on original maturity and 4.7 times based on residual maturity.^[2]

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^[1] Specifically, it ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.

^[2] Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.