Philippine payments position hits $1.5 billion surplus

The Philippines’ balance of payments (BOP) position swung back to a surplus in October after posting a deficit the prior six months, data released by the Bangko Sentral ng Pilipinas (BSP) on Monday revealed.

Central bank data showed that the BOP position posted a $1.510-billion surplus in October, compared to the $414-million deficit in September, and the $711-million surplus in October 2022.

The October 2023 surplus was also the highest in nine months, or since the $3.081-billion surplus recorded in January.

The BOP consists of Philippine transactions with the rest of the world during a specific period. A surplus means more funds entered the country, while a deficit means more funds exited.

“The BOP surplus in October 2023 reflected inflows arising mainly from the national government’s (NG) net foreign currency deposits with the BSP and the BSP’s net foreign exchange operations and net income from its investments abroad,” the central bank said in an accompanying statement.

The latest figures brought the year-to-date BOP to a $3.246-billion surplus, a reversal of the $7.119-billion deficit recorded in the same period last year.

“Based on preliminary data, this development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the NG,” the BSP said.

The latest data available from the BSP indicate that year-to-date cash remittances were recorded at $24.494 billion in September, up 2.8% from $23.825 billion in the first months of 2022.

Data from the Philippine Statistics Authority (PSA) also indicate that the balance of trade in goods (BoT-G) posted a $3.511-billion deficit in September, lower than the $4.828-billion deficit the same month last year.

The BSP also attributed net inflows from foreign direct investments (FDIs) to the surplus for October, albeit lower during the period.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the growth could still be expected in the last quarter of the year.

“For the coming months, BOP data could still improve with the continued increase/growth in the country’s structural inflows as the economy reopens further towards greater normalcy,” he said in a separate commentary.

Ricafort also cited the continued annual growth in OFW remittances, revenues of business process outsourcing (BPO) firms, export revenues, foreign tourism receipts, and revenues from Philippine Offshore Gaming Operators (POGOs), among others.

In terms of the gross international reserves (GIR), the BSP reported an increase to $101.0 billion as of end-October from $98.1 billion at the end of September, which it said was a “more than adequate” external liquidity buffer.

This is equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. It is also some 5.8 times the country’s short-term external debt based on original maturity, and 3.7 times based on residual maturity. — DVM, GMA Integrated News