Debt raised from samurai bonds sale boosts Philippine dollar position in April

MANILA, Philippines — Proceeds from the government’s recent sale of “samurai” bonds gave the Philippines its first dollar surplus for the year in April, the Bangko Sentral ng Pilipinas reported Wednesday.

What’s new

The country’s balance of payments (BOP) posted a $2.61 billion surplus in April, snapping three consecutive months of deficit.

Why this matters

BOP is a summary of a country's economic transactions with the rest of the world during a specific period. A surplus arises when more foreign funds entered the economy against those that left, while a deficit means the opposite happened.

For 9 of 12 months last year, BOP had stayed in a surplus after the pandemic forced the government to secure loans abroad which in turn, entered the country in foreign currencies. This happened while dollars spent to pay for external obligations dropped because of low imports. The Philippines' external position only reverted to a deficit in January.

For this year, the central bank expects the BOP to register a surplus of $6.2 billion, down from a record-high of $16 billion in 2020 for the good reason that economic activities used to drive dollar outflows are finally gaining pace from a crisis-induced slump.

What the BSP says

The BSP attributed last month’s BOP surplus to inflows from the government’s sale of Yen-denominated bonds in late March. The Duterte administration raised ¥55 billion during the offer, which was then deposited with the BSP.

Other figures

• The BOP surplus in April was enough to trim the four-month deficit to $231 million. The latest year-to-date gap was partly due to the country’s merchandise trade deficit and net outflows of foreign portfolio investments, the central bank said.
• The BOP position reflects an increase in the final gross international reserves (GIR) level to $107.71 billion as of end-April. This gives the economy enough buffer against external shocks and is enough to pay for 12.3 months’ worth of imports.