BOP posts US$1.8 billion deficit in July 2022

The country’s overall balance of payments (BOP) position posted a deficit of US$1.8 billion in July 2022, a reversal from the US$642 million BOP surplus recorded in the same month last year.

The BOP deficit in July 2022 reflected outflows arising 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 July brought the cumulative BOP level for January-July 2022 to US$4.9 billion deficit, higher than the US$1.3 billion deficit recorded in the same period a year ago. Based on preliminary data, this cumulative BOP deficit reflected the widening trade in goods deficit.^[1]

The gross international reserves level declined to US$99.8 billion as of end-July 2022 from US$100.9 billion as of end-June 2022.

Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.3 months’ worth of imports of goods and payments of services and primary income.^[2]

Moreover, it is also about 7.2 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.^[3]

^[1] Based on preliminary data from the Philippine Statistics Authority’s (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-June 2022 reached US$29.8 billion, up from the
US$18 billion deficit posted in the same period last year.

^[2] 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.

^[3] 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.