BOP posts US$439-M deficit in May 2023; end-May GIR settles at US$100.6B

The country’s overall balance of payments (BOP) position posted a deficit of US$439 million in May 2023, lower than the US$1.6 billion BOP deficit recorded in the same month last year.

The BOP deficit in May 2023 reflected outflows arising mainly from the National Government’s (NG) net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures.

Notwithstanding the deficit in May, the cumulative BOP position registered a surplus of US$2.9 billion in the first five months of the year.

This level is a reversal from the US$1.5 billion deficit recorded in the same period a year ago.

Based on preliminary data, this cumulative BOP surplus was partly attributed to net inflows from personal remittances, net foreign borrowings by the NG, trade in services, and foreign direct investments.

The gross international reserves (GIR) level decreased to US$100.6 billion as of end-May 2023 from US$101.8 billion as of end-April 2023.

The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.^[1]

Moreover, it is also about 5.8 times the country’s short-term external debt based on original maturity and 4.1 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.