Except for the month of June this year, the Philippines has been earning more dollars than it has been spending since November 2018 courtesy of remittances from Filipinos abroad and some foreign investments.
This combination led to a large balance of payment surplus by end of October 2019, according to the Bangko Sentral ng Pilipinas (BSP).
BSP data showed that overall balance of payment had a surplus of $163 million in October 2019 compared to a $458 million deficit in the same month last year.
In a statement, the BSP said this reflected increases in net foreign currency deposits and BSP income from investments abroad.
Payments made on foreign debts, however, offset some of the dollar stash, the BSP said.
Balance of payments since January 2019 was already $5.73 billion compared with a deficit of $5.59 billion in the first 10 months of 2018.
The balance of payments reflects the total tally of the economy’s transactions with the rest of the world, whether through trade of goods and services or the movement of financial assets like short- or long-term investments, as well as debt.
In general, a balance of payments surplus supports the value of the local currency against the US dollar on the foreign exchange market.
Gross international reserves total is $85.83 billion by end October 2019, the BSP said.
This represents a “more than ample” buffer for 7 and a half months’ worth of importation of goods and payments for services and primary income.
It is also equivalent to 5 and a half times the country’s short-term external debt based on original maturity and a little more than 4 times based on residual maturity./Edited by TSB