BOP reverts to $5-B surplus in 7 months

MANILA, Philippines — The country’s balance of payments (BOP) reverted to a $248 million surplus in July amid the strong inflows from the central bank’s foreign exchange operations and investments abroad as well as national government foreign currency deposits.

The Bangko Sentral ng Pilipinas (BSP) said the BOP position yielded a surplus of $248 million in July, reversing the $404 million deficit recorded in June and the $455 million shortfall booked in July last year.

This brought the country’s BOP surplus to $5.04 billion in the first seven months of the year, reversing the $3.71 billion deficit recorded in the same period last year.

“Inflows in July 2019 were reflected in the BSP’s foreign exchange operations and income from its investments abroad, as well as in the national government’s net foreign currency deposits,” the central bank added.

The BSP said the inflows in July were offset partially by outflows that were reflected in the payments made by the national government on its foreign exchange obligations.

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 in 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.

 “The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first half of the year and net inflows of foreign direct investments during the first five months of the year,” the BSP said.

Latest data showed personal remittances from Filipinos abroad inched up by 2.9 percent to $16.25 billion from January to June this year compared to $15.79 billion in the same period last year, while cash remittances coursed through banks went up by 3.2 percent to $14.64 billion from $14.18 billion.

On the other hand, FDI inflows fell by 37.1 percent to $3.14 billion in the first five months of the year from $5 billion in the same period last year due to a sharp decline in equity inflows and faster rise in outflows.

The BSP expects the Philippines to book a BOP surplus of $3.7 billion this year, reversing the $2.3 billion deficit recorded last year. The projected surplus this year is also a complete reversal of the projected BOP deficit of $3.5 billion as of November last year.

This despite the projected record current account deficit of $10.1 billion this year due to a wider trade deficit.

The BSP sees a lower net FDI inflow of $9 billion instead of $10.2 billion this year and a higher net inflow of foreign portfolio investments of $4 billion instead of a net outflow of $200 million.