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Treasury & Capital Markets
Philippines widening account deficit ‘not a cause for concern’, says BSP official
The country's currency, which took a knock since last year because of a yawning account deficit, has continued to underperform
The Asset 3 Oct 2018

The Philippine current account deficit has swelled to its largest in years, but central bank assistant governor Restituto Cruz says this "is not necessarily a cause for concern".

At The Asset 13th Philippine Forum in Manila, Cruz assures the near-200 forum attendees that the deficit can be financed. At least for now, "the current account deficit is not necessarily a cause for concern," he says.

The Philippines is investing more than what its national savings can fund. The current account gap swelled to US$3.1 billion in the first six months of 2018, 23 times more than year-ago's shortfall of US$133 million. In 2017, the deficit more than doubled to US$2.5 billion - its widest since 1999.

The deficit has weighed on the Philippine peso, which continues to underperform. 

"BSP (Bangko Sentral ng Pilipinas) is not worried by the depreciation of the peso," Cruz adds, citing "fundamentals" as reason for the weak currency. 

He says the BSP surveillance framework is anchored on the country's policy agenda. Going forward, the BSP plans to support reforms in sectors like agriculture.

"Reform in the agriculture sector is a priority," says Cruz.


Photo by D Futalan from Pexels

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