BOP remains in surplus, reverses last year’s gap

MANILA, Philippines — The Philippines continued to maintain a healthy external payments position, posting a balance of payments (BOP) surplus of $5.53 billion in the first eight months, reversing a $2.44 billion deficit recorded in the same period last year, the Bangko Sentral ng Pilipinas reported yesterday.

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

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.

According to BSP data, personal remittances from Filipinos abroad climbed by 3.2 percent to $19.12 billion from January to July compared to $18.46 billion in the same period last year, while cash remittances coursed through banks went up by nearly four percent to $17.22 billion from $16.58 billion.

On the other hand, foreign direct investment inflows plunged by 379 percent to $3.57 billion in the first half from $5.84 billion in the same period last year due to a sharp decline in equity inflows and faster rise in outflows.

For August alone, the central bank said the country’s BOP surplus shrank by 61.2 percent to $493 million from $1.27 billion in the same month last year.

The BSP said the surplus in August reflected the inflows from the net foreign currency deposit of the national government, as well as the central bank’s income from its investments abroad.

The regulator said the inflows were partially offset by outflows representing payments made by the national government on its foreign exchange obligations.

The BSP expects the country to book a BOP surplus of $3.7 billion this year, reversing the $2.3 billion deficit recorded last year.

This despite the projected record current account deficit of $10.1 billion this year due to wider trade deficit. The CA deficit shrank to $1.74 billion in the first semester from $3.75 billion in the same period last year.

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