Balance of Payments Deficit Hits USD 1.819 Billion in July

The Philippines’ balance of payments (BoP) position fell further into deficit for a fourth straight month in July at USD 1.819 billion (PHP 101.91 billion), with more US Dollars flowing out of the country to pay for the government’s foreign debt. By contrast, the nation’s BoP for the same month last year was a surplus of USD 642 million (35.97 billion). July’s deficit was also larger than the USD 1.574 billion (PHP 88.19 billion) shortfall recorded in June. July’s deficit largest one recorded in 17 months, or since the USD 2.019 billion (PHP 113.12 billion) deficit recorded in February 2021.  The Bangko Sentral ng Pilipinas (BSP) stated that “the 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.”

Through the first seven months of 2022, the BoP deficit widened to USD 4.92 billion (PHP 275.67 billion) compared to the USD 1.297 billion (PHP 72.67 billion) deficit in the same period last year. The BSP also attributed the widening BoP deficit to the widening “trade in goods deficit.” The Philippines’ monthly imports bill has risen dramatically mainly due to rampant inflation among global food and energy markets. The trade deficit for the first six months of 2022 amounted to USD 29.793 billion (PHP 1.66 trillion), compared to the USD 17.953 billion (PHP 1.005 trillion) recorded in the same period last year.