The country continued to post a surplus in its balance of payments in June, but the amount was slower as more obligations denominated in foreign currencies had to be settled.
The Bangko Sentral ng Pilipinas reported Tuesday that the BOP surplus reached $222 million in June, down by nearly 60 percent from the $544 million registered in the same month last year.
The surplus was driven by the country’s usual sources of foreign-currency inflows, such as remittances, foreign portfolio investments, and investments in the country’s business process outsourcing sector.
Gauge
On the other hand, outflows are largely accounted for by payments of the country’s maturing obligations with foreign creditors.
BOP, which reflects the country’s commercial transactions with the rest of the world, is the difference between outflows and inflows of foreign currencies to and from the country.
A surplus in BOP adds to the country’s overall reserves of foreign currencies—the gross international reserves. GIR is a gauge used to determine the ability of one country to pay for its imports and debts, and engage in other commercial transactions with parties abroad.
Record $68.997 billion
The BSP said that despite the decline in the BOP surplus in June, the figure for the first half of the year still marked a year-on-year increase.
BOP surplus in January to June amounted to $5.016 billion, up by 53 percent from $3.284 billion in the same period last year.
Earlier, the central bank reported that the country’s GIR, aided by the surplus in the BOP, amounted to a record high of $68.997 billion as of end-June, up by 42 percent from $48.704 billion in the same period last year.
The central bank claims that the country’s GIR is at a level comfortable enough for the Philippines to meet any of its short-term requirements.
Favorable
Data from the central bank also showed that the latest amount of GIR was 5.9 times the country’s debt maturing within one year.
The BSP said this is favorable for the country’s credit image, because it indicates its ability to pay maturing obligations.
The BSP credits the country’s foreign currency holdings for its improved credit standing recently.
Last month, Moody’s Investors’ Service upgraded the country’s credit rating from three to two notches below investment grade.
This was after Standard & Poor’s conducted a similar ratings action last November.
The BSP credits the country’s foreign currency holdings for its improved credit standing recently.