MANILA, Philippines - The country posted a balance of payments surplus (BOP) of $388 million in May, bringing the total for the first five months to $2.733 billion, up 27.5 percent from the $2.143-billion surplus recorded in the same period last year.
The Bangko Sentral ng Pilipinas (BSP) said the BOP surplus in May was a reversal of the $55-million deficit a year ago. It was, however, much lower than the $982 million recorded in April.
The central bank said the country’s strong BOP position was supported by the sustained increase in remittances, the surge in exports, and higher foreign investments.
“The surplus is due to inflows from official loans and BSP operations although there were also outflows to service National Government debt payments, these were not enough to offset the forex inflows,” BSP Governor Amando M. Tetangco Jr. said.
Remittances, which fuel household consumption, rose 6.6 percent to $5.9 billion in January to April this year, while exports grew by 38.9 percent to $14.903 billion during the same period.
With remittances expected to climb eight percent, and exports by 12 percent this year, the central bank said the country’s BOP surplus may reach $3.7 billion, higher than the initial estimate of $3.2 billion.
The Philippines posted a BOP surplus of $5.3 billion in 2009, the highest in two years.
Current account surplus, meanwhile, is projected to amount to $8.1 billion this year, slightly lower than the $8.6 billion in 2009.
Net foreign portfolio investments reached an 11-month high of $210.11 million in April, central bank data showed, reflecting an inflow of foreign funds betting on strong growth in the region this year.
The GIR, which refers to the sum of all foreign exchange flowing into the country, reached a new record high of $47.65 billion in May from $39.59 billion in the same month last year. It could cover 9.4 months of imports of goods and payments of services and income and is also equivalent to 11.9 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity falling due in the next 12 months.
“Our healthy external position is due in part to the continued surge of overseas Filipino remittances to historic high levels,” Tetangco said.
The BSP recently upgraded its growth forecast for the amount of money sent home by overseas Filipino workers (OFWs) to eight percent instead of six percent due to the strong demand for Filipino skilled workers after growing by 6.6 percent to a record level $17.348 billion last year.
Latest data showed that remittances went up by 6.6 percent to $5.859 billion in the first four months of the year from $5.36 billion in the same period last year on the back of strong demand for professional and skilled Filipino workers as well as improving global employment opportunities.
Tetangco pointed out that the central bank has been working on lowering remittance charges and conducting financial education on investment opportunities and investor protection programs.
OFWs and their beneficiaries are expected to enjoy lower remittance fees starting the third quarter of the year with the complete operational of the Philippine Payments and Settlements System (Philpass) Remit System.
The settlement of OFW remittances through the Philpass Remit System would result to savings of between P100 and P500 per transaction as current system charges between P150 and P550 per transaction.
OFW families are expected to save at least P92 million to as high as P922 million due to the faster and cheaper delivery of remittances to the beneficiaries at a lower rate of P50 per transaction instead of the current range of between P100 and P550 per transaction.