Gov’t borrowings boost BOP surplus to $2.1B

The dollar flow surplus of the Philippine economy—which has been building up every month since the start of the pandemic—surged significantly in September as the inflow of foreign exchange from the government’s overseas borrowings added to the decline in the country’s import spending.

According to the Bangko Sentral ng Pilipinas (BSP), the country’s overall balance-of-payments position posted a surplus of $2.1 billion last September, bringing the year-to-date surplus position to $6.88 billion.

“The [balance-of-payments] surplus in September 2020 reflected mainly the inflows from the BSP’s foreign exchange operations and income from its investments abroad, and the national government’s foreign currency deposits with the BSP,” the central bank said.

These inflows were partly offset, however, by the national government’s payments of its foreign currency debt obligations.

The balance of payments is the net tally of all the country’s transactions with overseas parties, including the import and export of goods, payments for services, inflows or outflows of short- and long-term investments, and remittances, among others. A surplus means the economy is earning more dollars than it is spending, while a deficit represents the opposite, with their corresponding effects on the value of the country’s currency.

The central bank said the cumulative balance-of-payments surplus of $6.88 billion was higher than the $5.57 billion surplus recorded for the same period a year ago.

The BOP position reflected an increase in the final gross international reserves level of $100.44 billion as of end-September 2020 compared with $98.95 billion as of end-August 2020.

At this level, the country’s dollar reserves represented a “more than adequate” external liquidity buffer that could cushion the domestic economy against external shocks, the central bank said.

This was equivalent to 10 months’ worth of imports of goods and payments of services and primary income, and was also about nine times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.

Earlier this month, the central bank revised its balance-of-payments projections to a surplus of $8.1 billion— equivalent to 2.2 percent of gross domestic product—up from $600 million in 2020 and $3.4 billion, or 0.9 percent of GDP, in 2021. INQ