Balance of payments stays in surplus in Oct
Except for the month of June this year, the Philippines has been earning more dollars than it has spent since November of last year—thanks to remittances from expatriate Filipinos, aided by some foreign investments—resulting in a large balance-of-payments (BOP) surplus for the economy at the end of October, according to the central bank.
Data from the Bangko Sentral ng Pilipinas showed that the country’s overall BOP position posted a surplus of $163 million in October 2019, a reversal of the $458-million deficit recorded in the same month last year.
“Inflows in October 2019 reflected the increase in the national government’s net foreign currency deposits and BSP’s income from its investments abroad,” the central bank said in a statement. “These inflows were offset, however, by outflows representing payments made by the government on its foreign exchange obligations during the month in review.”
On a cumulative basis, the BOP position for the January-October 2019 period posted a surplus of $5.73 billion, representing a turnaround from the $5.59-billion deficit recorded in the first 10 months of 2018.
“The surplus may be attributed partly to personal remittance inflows from overseas Filipinos and net inflows of foreign direct investments,” the central bank said.
The BOP 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 BOP surplus supports the value of the local currency against the US dollar on the foreign exchange market.
The central bank said the latest BOP position reflected the final gross international reserves level of $85.83 billion as of end-October 2019. At this level, the country’s dollar reserves represented a “more-than-ample” liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.
It is also equivalent to 5.5 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
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