PH posts Oct balance of payments surplus of $1.5B

MANILA  -The Philippines’ balance of payments (BOP) rang up at a surplus of $1.5 billion in October, after seven months of deficit readouts, thanks mainly to fresh debt as the national government returned to the foreign currency-based retail bond market.

The last time that the monthly BOP showed a surplus was in March with $1.27 billion. After that, and throughout the next eight months, the tally of the country’s transactions with the rest of the world registered a monthly deficit that ran as much as $606 million in June.

The Bangko Sentral ng Pilipinas said in a statement that the BOP surplus in October was mainly due to “the national government’s net foreign currency deposits with the (BSP), as well as the BSP’s net foreign exchange operations and net income from its investments abroad.”

Also, the BOP surplus was more than double the $711 million recorded in October 2022.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said more borrowings on the national government’s account led to the October print, which was “largely brought about by the proceeds of the retail dollar bonds (RDBs) worth $1.26 billion.”

READ: Gov’t raises $1.26B from second retail dollar bond sale

In October, the government issued the second tranche of the RDBs or RDB2 designed specifically, but not exclusively, for overseas-based Filipinos.

Finance Secretary Benjamin Diokno had described RDB2 as “a big leap towards achieving financial inclusion for our citizens, especially our dollar-earning overseas Filipino workers.”

Further, the latest monthly readout helped cement the BOP position since the start of this year at a surplus, with a cumulative $3.25 billion, reversing from a deficit of $7.12 billion in the same period last year.

“This development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the [national government,]” the BSP said.

“Further, net inflows from foreign direct investments contributed to the surplus, albeit lower during the period,” the central bank added.

Meanwhile, the BSP confirmed that the gross international reserves (GIR) went past the century mark to reach $101 billion at the end of October.

READ: PH forex reserves back above $100B as of end-October

This final GIR result for October was less than the preliminary figure of $101.1 billion reported earlier this month. It also represented an increase of $3.9 billion from the $98.12 billion recorded at the end of September.

The GIR remains a more-than-adequate external liquidity buffer, being equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. The stock is also about 5.8 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.