August surplus trims 8-mo BOP deficit

The Philippines posted a balance of payments (BOP) surplus for the second straight month this year in August, although the eight-month external payments position remains at a huge deficit.

The Bangko Sentral ng Pilipinas (BSP) is nonetheless keeping its $1.1-billion BOP surplus forecast for the year, Deputy Governor Diwa C. Guinigundo told a press conference Monday.

Latest data from the Philippine central bank showed that the country’s BOP in August registered a surplus of $114 million, a reversal of the $318-million deficit in the same month last year. A BOP surplus means that more foreign money entered the economy than the amount that exited; a deficit is its opposite.

The surplus in August, however, was smaller than the $501 million in July.

At end-August, the BOP position stood at a deficit of $3.53 billion. The surplus in the month of August helped slash the eight-month BOP deficit from end-July’s $3.643 billion.

Guinigundo attributed the slightly improved BOP position in August to the government’s payments for maturing obligations.

The deficit in January to August, meanwhile, was a result of the “continuing deficit in foreign portfolio investments,” Guinigundo said.

Still, the BSP is sticking with its projection of a surplus by the end of the year, the BSP official said.

“The market has started to discriminate as early as the second quarter of 2014. As a result, we’ve seen a gradual return of capital to emerging markets, particularly the Philippines,” Guinigundo said.

As for the US Federal Reserve decision last week to keep interest rates ultra-low, the BSP sees “no significant impact of this action to the external payments position,” he said.