BOP remains in surplus for 7th straight month

MANILA, Philippines — The country’s balance of payments (BOP) remained in surplus for the seventh straight month in August due to the continued higher inflow of foreign exchange, the Bangko Sentral ng Pilipinas (BSP) said.

For the January to August period, the surplus stood at $4.77 billion, which was 13.7 percent smaller than the $5.53 billion recorded in the same period last year.

“The current BOP surplus was supported mainly by foreign borrowings by the national government along with lower net deficit in merchandise trade,” the central bank said in a statement.

Latest data from the Philippine Statistics Authority (PSA) showed the country’s trade deficit narrowed by 48 percent to $12.5 billion from January to July compared to $24.06 billion in the same period last year.

Imports fell by 28.1 percent to $46.64 billion while exports declined by 16.4 percent to $34.13 billion.

The BSP pointed out that the narrower trade gap helped offset the impact of higher net outflows of foreign portfolio investments, and lower net inflows from foreign direct investments, trade in services and personal remittances.

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 month of August alone, the country’s BOP surplus surged by 33.3 percent to $657 million from $493 million in the same month last year.

“The BOP surplus in August 2020 reflected mainly the inflows from the BSP’s foreign exchange operations and income from its investments abroad,” the central bank said.

The government has been tapping both offshore and onshore debt markets to raise much needed funds to cushion the impact of the COVID-19 pandemic.

Data from the Department of Finance showed the amount of foreign borrowings, loans and grant assistance secured by the Philippine government to combat the COVID-19 pandemic reached $9.41 billion as of Sept. 18.

The BSP said the BOP position reflects the all-time high gross international reserves of $98.95 billion as of end August, equivalent to 9.8 months’ worth of import of goods and payments of services as well as enough to cover nine times the country’s short term external debt based on original maturity.