Philippines' payments position swings to surplus in 2023 at $3.67B

The country's balance of payments (BOP) position swung to a surplus in 2023 from a deficit in 2022, according to data released by the Bangko Sentral ng Pilipinas (BSP).

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 left.

The Philippines’ BOP position in 2023 stood at a surplus of $3.672 billion, a reversal from a deficit of $7.263 billion in 2022.

“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 national government,” the BSP said.

“Further, net inflows from foreign direct investments contributed to the surplus, albeit lower during the period,” it added.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the country’s BOP position was likely supported “by the continued growth in the country’s structural US dollar inflows such as OFW remittances, BPO revenues, exports, foreign investments, and foreign tourism revenues, among others.”

In December 2023 alone, the BOP position was a surplus of $642 billion, higher than the $612-billion surplus in December 2022 and a turnaround from $216 billion in November.

“The BOP surplus in December 2023 reflected inflows arising mainly from the national government’s net foreign currency deposits with the BSP, net income from the BSP’s investments abroad, and the BSP’s net foreign exchange operations,” the central bank said.

Meanwhile, the gross international reserves (GIR) level—a measure of the country’s ability to settle import payments and service foreign debt—increased to $103.8 billion as of end-December 2023 from $102.7 billion as of end-November 2023.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

“Moreover, it is also about 6.0 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity,” it said. — VBL, GMA Integrated News