BOP streaks to $682-M surplus in August

MANILA, Philippines - The country’s balance of payments (BOP) surplus hit a five-month high of $682 million in August amid strong inflows, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The August surplus was a complete reversal of the $450 million deficit recorded in the same month last year.

BSP Governor Amando Tetangco Jr. said the surplus was due to the foreign exchange operations of the central bank as well as the foreign currency deposits of the national government.

He pointed out the surplus was partially offset by the payments made by the national government for its maturing obligations.

The Philippines incurred a BOP deficit of $813 million in January and $251 million in February before bouncing back in March with a surplus of $854 million, $184 million in April, $241 million in May, $418 million in June, $215 million in July, and $682 million in August.

This brought the BOP surplus at $1.53 billion from January to August, 3.6 percent lower than the $1.59 billion surplus recorded in the same period last year.

The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad.

A surplus means more money went into the economy while a deficit means otherwise.

For his part, BSP Deputy Governor Diwa Guinigundo said strong inflows came from the three percent expansion in cash remittances from January to July, as well as higher revenues from the business process outsourcing sector as well as robust tourism receipts.

Guinigundo added inflows of foreign direct investments (FDIs) almost doubled at 95 percent to $4.19 billion in the first six months while the net inflow of foreign portfolio investments or hot money reversed to an inflow of $2 billion in the first eight months of the year.

The BSP lowered the projected overall BOP surplus to $2 billion instead of the previous projection of $2.2 billion for 2016 due to the volatile global financial market caused by the impending interest rate hike in the US and the slowdown in China.

“With a cumulative BOP (surplus) for the eight months of $1.53 billion, the projection for full year is within reach,” Tetangco said.

Monetary authorities are expected to closely monitor external developments including the rate-setting meetings of the Open Market Committee of the US Federal Reserve and the Bank of Japan on Sept. 21.

“We continue to monitor global developments and market sentiment with regards to announcements of advance economies central banks, including the Fed, as these could lead to global portfolio rebalancing away from emerging market economies like the Philippines,” he said.