Gregorio E.

Baccay III, DPA

Think Out Loud

Email: gregbaccay@gmail.com

Overall Balance of Payment (BOP) Position Registers US$583 Million Deficit

in May 2018

The country’s overall balance of payments (BOP) position in May 2018 posted a deficit of US$583
million, higher than the US$59 million BOP deficit recorded in the same month last year. Outflows
in May 2018 stemmed mainly from foreign exchange operations of the BSP and payments made
by the National Government (NG) for its maturing foreign exchange obligations. These were
partially offset, however, by net foreign currency deposits of the NG and income from the BSP’s
investments abroad during the month.

For the period January-May 2018, the cumulative BOP position yielded a higher deficit of US$2.08
billion compared to the US$136 million BOP deficit recorded in the comparable period in 2017. The
higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise
trade deficit (based on Philippine Statistics Authority preliminary data) for the first four months of
the year that was brought about by the sustained rise in imports of raw materials and capital goods
to support domestic economic expansion.

The reported BOP position is consistent with the final GIR level of US$79.20 billion as of end-May
2018. At this level, the GIR represents more than ample liquidity buffer and is equivalent to 7.6
months’ worth of imports of goods and payments of services and primary income. It is also
equivalent to 6.2 times the country’s short-term external debt based on original maturity and 4.3
times based on residual maturity.