BOP posts $847 million surplus in November 2018

MANILA, Philippines — Strong inflows boosted the country’s external payments position with the balance of payments (BOP) swinging back to a surplus in November, ending two straight months of deficits, according to the Bangko Sentral ng Pilipinas (BSP).

Based on BSP data, the country posted a BOP suplus of $847 million in November, a complete reversal of the $44 million shortfall recorded in November last year as well as the $458 million deficit booked in October.

 “Inflows in November stemmed mainly from the BSP’s foreign exchange operations and its income from investments abroad during the month,” the central bank said.

The inflows, the BSP said, were partially offset by the payments made by the national government for its foreign exchange obligations and its net foreign currency withdrawals.

The BOP is the difference in total values between payments into and out of the country over a period. A surplus means more foreign exchange flowed into the country from exports, remittances from overseas Filipinos, business process outsourcing earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

For the first 11 months, the country’s BOP deficit widened by 167 percent to $4.75 billion from $1.78 billion in the same period last year.

 “The higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise trade deficit for the first 10 months that was brought about by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion,” the BSP said.

Data from the Philippine Statistics Authority (PSA) showed the country’s trade deficit swelled by 68.5 percent to $33.92 billion from January to October compared to the $20.13 billion in the same period last year.

Imports rose by nearly 17 percent to $90.98 billion in the first 10 months from $77.87 billion in the same period last year, while exports slipped 1.2 percent to $57.07 billion from $57.75 billion.

The peso has been weakening amid the strong demand for dollars to finance the sustained rise in imports of raw materials and intermediate goods, as well as capital goods to support domestic economic expansion.

The BSP said the reported BOP position is consistent with the final gross international reserves level of $75.68 billion as of end-November, equivalent to 6.7 months’ worth of imports of goods and payments of services and primary income.

The foreign exchange cover is also equivalent to 5.6 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.

The BSP has revised upwards is BOP deficit target for 2018 to $5.5 billion or 1.6 percent of gross domestic product (GDP) instead of $1.5 billion or 0.4 percent of GDP.