Philippines books 4th straight month of BOP surplus

MANILA, Philippines — The country’s external payments position strengthened for the fourth straight month with the balance of payments (BOP) surplus hitting $467 million in February, a complete reversal of the $429 million deficit recorded in the same month last year due to strong inflows, according to the Bangko Sentral ng Pilipinas.

Data released by the BSP showed the country’s BOP position has been recording a surplus since November last year with $847 million, December with $2.44 billion, and January with $2.7 billion.

 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.

In a statement, the central bank said inflows in February stemmed mainly from the national government’s net foreign currency deposits as well as BSP’s foreign exchange operations and income from investments abroad.

However, the BSP said payments made by the national government for its foreign obligations in February partially offset the increase in the BOP position.

From January to February, the BSP said the country’s BOP position yielded a surplus of $3.17 billion due to higher remittances from Filipinos living and working abroad as well as net inflows from foreign portfolio investments or hot money.

This was a turnaround from the $961 million deficit registered in January and February last year.

“The surplus mat be attributed partly to remittance inflows from overseas Filipinos in January and net inflow of foreign portfolio investments in the first two months of the year, which was a reversal of the net outflows reported in January to February 2018,” the BSP added.

The country’s BOP shortfall widened by 167 percent to $2.31 billion last year from $863 in 2017 due mainly from the reversal of he current account to a deficit with the continued widening of the trade-in-goods deficit.

The shortfall last year was lower than the BSP’s revised full-year deficit assumption of $5.5 billion or 1.6 percent of gross domestic product (GDP).

The reported BOP position reflected a gross international reserves (GIR) level of $82.78 billion in February, more than ample liquidity buffer and is equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.2 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.

The BSP uses the buffer to buy or sell dollars if it deems necessary to prevent sharp depreciation or appreciation of the peso.

For 2019, the BSP sees a BOP deficit of $3.5 billion or one percent of GDP and a GIR level of $77 billion, enough to cover 6.3 month’s worth of imports of goods and payments of services.