Government withdrawals to pay foreign debts led to April dollar deficit – BSP
Data from the Bangko Sentral ng Pilipinas (BSP) revealed that the Philippines experienced a deficit of $639 million in its overall balance of payments (BOP) in April. This marked a significant turnaround from the $1.2 billion surplus recorded in March and was over four times larger than the $148 million deficit in the same month last year.
The BOP is a summary of an economy’s transactions with the rest of the world during a specific period. A surplus occurs when more foreign funds enter the economy compared to those leaving, potentially increasing the country’s resources to pay for foreign debts and imports. Conversely, a deficit means the opposite.
Despite a projected BOP surplus of $700 million for this year, the April deficit was enough to shift the four-month BOP back to a deficit of $401 million, reversing the $3.3 billion surplus from the same period last year.
The BSP attributed the deficit in April to outflows mainly from the national government’s withdrawals of foreign currency from its deposits with the BSP to settle foreign currency debts and cover various expenditures. This development was a departure from the significant BOP windfall of $3.7 billion in 2023.
