11-month BOP surplus exceeds 2011 estimate

Supported by remittances from overseas Filipinos, the Philippines’ surplus in the balance of payments reached $10.29 billion in the first 11 months in 2011, the Bangko Sentral ng Pilipinas said on Monday, December 19, 2011. AFP

The surplus in the balance of payments reached $10.29 billion in the 11 months to November, supported by inflows from portfolio and foreign direct investments, and remittances, the Bangko Sentral ng Pilipinas reported Mondday.

The BOP surplus so far this year has exceeded a revised $10 billion, or 4.4 percent of GDP, estimated by the central bank for 2011. The surplus was expected to narrow to $2.8 billion, or 1.1 percent of GDP, next year.

The 11-month surplus was, however, down 21 percent from $13.08 billion in the same period last year. The Philippines posted a record BOP surplus of $14.3 billion in 2010, boosted by strong portfolio inflows.

The BOP surplus also shrank in November as the country settled more maturing obligations, the BSP said.

Documents from the central bank showed that during the month, the BOP surplus amounted to $364 million, down 91 percent from $3.9 billion in the same month last year.

According to BSP Deputy Governor Diwa Guinigundo, debt payments made by the national government to foreign creditors forced the country to shell out much more foreign currencies that it did last year.

Despite the decline, Guinigundo said the surplus still indicated a comfortable external liquidity position of the country.

The BOP is the difference between the inflow and outflow of foreign currencies to and from the country. A surplus adds to the country’s total reserves of foreign currencies or the gross international reserves (GIR).

Guinigundo said the surplus in the first 11 months helped the country build its foreign exchange reserves, which have reached an all-time high of $76 billion.

The latest GIR, which indicates a country’s ability to engage in commercial transactions with the rest of the world, is enough to cover 11 months’ worth of imports.

The central bank has kept its remittance growth forecast of 7 percent this year despite a slowing US economy and debt problems in Europe. Remittance growth is seen slowing to 5 percent next year.

Net portfolio inflows in the 10 months to October reached $3.44 billion compared with last year’s $2.51 billion.—With a report from Reuters