THE Philippines’ balance of payments (BoP) posted a $1.4-billion deficit in May, according to the Bangko Sentral ng Pilipinas (BSP).

Central bank data released on Wednesday showed this was a reversal from $2.43-billion BOP surplus recorded in the same month a year ago.

In a statement, the BSP mainly attributed the May deficit to “outflows arising from the foreign currency withdrawals of the national government (NG) from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures.”

But the central bank said the outflows were partly offset by the inflows from the BSP’s foreign

exchange operations and from the national government’s external borrowings that were deposited with the BSP.

For the first five months of 2021, the cumulative BOP position incurred a deficit of $1.63 billion against a surplus of $4.03 billion in the same period last year.

“Based on preliminary data, this cumulative BOP deficit was partly attributed to wider merchandise trade deficit and net outflows of foreign portfolio investments,” said the central bank.

In a comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the BoP deficit was partly due to net foreign debt payments and some net foreign selling at the local stock market during the month amid an MSCI rebalancing.

“Possible wider trade deficit in May 2021 after NCR Plus quarantine classification eased to GCQ (general community quarantine) with some restrictions from MECQ (modified enhanced community quarantine), thereby further re-opening the economy from lockdowns and leading to some pick up in economic activities as well as in importation though offset by gains in foreign investments, gold holdings, proceeds of Monde Nissin IPO (initial public offering) and other fund-raising activities,” said Ricafort.

NCR Plus is made up of the National Capital Region and the provinces of Bulacan, Laguna, Rizal and Cavite.

The BSP said the BOP position reflects a decrease in the final gross international reserves (GIR) level to $107.25 billion as of end-May compared with $107.71 billion as of end-April and $110.12 billion at the beginning of the year.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 12.2 months’ worth of imports of goods and payments of services and primary income,” it said.

“Moreover, it is also about 7.9 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity,” it added.