Foreign loans by gov’t bring in more dollars to PH economy
MANILA, Philippines—More dollars came in than left in April as the national government took on more foreign loans to spend on its COVID-19 response, according to the Philippine central bank.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the country’s overall balance of payments position posted a surplus of $2.61 billion in April 2021, higher than the $1.67 billion dollar flow surplus recorded in the same month in 2020.
The balance of payments surplus in April 2021 was attributed to inflows arising mainly from proceeds of the national government’s global and samurai bond issuances, which were deposited with the BSP.
The balance of payments is the net tally of foreign currency inflows and outflows of an economy versus the rest of the world during a given period. This includes inflows, computed in dollars, for goods and services that the country sells overseas, as well as investment inflows, offset by money spent on imports and repatriation of foreign investments.
A surplus means the economy is getting more dollars than it is spending while a deficit means the opposite.
The BSP said the balance of payments surplus in April reduced the cumulative deficit for January to April 2021 to $231 million, from a deficit of $2.84 billion for the first quarter of 2021.
The current year-to-date balance of payments level is a reversal of the $1.6 billion surplus recorded in the same period in 2020.
Based on preliminary data, this cumulative deficit was partly due to the country’s merchandise trade deficit and net outflows of foreign portfolio investments.
The balance of payments position reflects an increase in the final gross international reserves level to $107.71 billion as of end-April 2021 from $104.48 billion as of end-March 2021.
The latest dollar reserve level represents a more than adequate external liquidity buffer, which can help cushion the domestic economy against external shocks. This buffer is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income. It is also about 7.4 times the country’s short-term external debt based on original maturity and 5.1 times based on residual maturity.
