MANILA —The Philippines’ balance of payments (BOP) position returned to a surplus in 2023, which even exceeded the Bangko Sentral ng Pilipinas’ (BSP) more optimistic projection amid strong inflows from key sources.
Data released on Friday by the BSP showed the country’s position in terms of its transactions with the rest of the world swung to a $3.7 billion surplus last year, a turnaround from the $7.3 billion deficit recorded in 2022.
A surplus arises when more foreign payments enter the economy compared to those that left, giving the country enough resources to pay its foreign debts and meet import requirements. A BOP deficit means the reverse happened.
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In December 2023, the BOP posted a surplus of $642 million, the highest in two months and bigger than the $612-million surplus in the same month the year prior.
The latest data showed that last year’s BOP surplus crushed the BSP’s upgraded forecast of a $1.1-billion excess.
Explaining the better-than-expected performance, the central bank cited “higher net inflows” from remittances, trade in services and foreign borrowings by the national government.
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The BSP said net inflows from job-generating foreign direct investments also contributed to the 2023 surplus, albeit lower after high inflation and aggressive rate hikes meant to tame fast-rising prices frayed investor nerves.
At the same time, the BSP said the Philippines’ dollar reserves, which can be used in times of external shocks and financial stress, amounted to $103.8 billion by the end of 2023, a little above the central bank’s expected $100 billion.
That amount of buffer funds can cover 7.8 months’ worth of import needs, and is six times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.