MANILA, Philippines – The country’s balance of payments (BOP) surplus rose to an all-time high of $13.17 billion in the first 11 months of the year on the back of surging capital inflows to emerging markets like the Philippines, prompting monetary authorities to review the external payments position targets for next year.
Data released by the central bank yesterday showed that the country’s BOP as of end-November this year was $7.972 billion more than the $5.206 billion booked as of end-November last year.
For the month of November alone, the country posted a surplus of of $3.9 billion, a complete reversal of the BOP deficit of $93 million in the same month last year.
The BOP refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo attributed the record BOP surplus this year to the strong recovery of the country’s merchandise exports, robust remittances from overseas Filipinos, rising revenues from the business process outsourcing (BPO) sector, and improving tourism receipts.
Guinigundo also cited the higher earnings of the BSP from its investments as well as the surging inflows of foreign portfolio investments or “hot money”, and foreign direct investments (FDIs).
The surplus from January to November already surpassed the revised BOP surplus target of $8.2 billion, from $3.7 billion. Originally, the BSP expected the BOP surplus to hit $3.2 billion this year but as early as June, this was already breached.
The country’s BOP surged to $6.421 billion in 2009 as it reflected the new treatment of allocation of Special Drawing Rights (SDRs) consistent with the guidelines of the BOP, from $89 million in 2008.
Latest data showed that the amount of money sent home by Filipinos abroad hit a new monthly record of $1.673 billion in October as overseas Filipino workers (OFWs) sent more money to their loved ones in the Philippines in time for the Christmas season. This brought the OFW remittances to $15.456 billion in the first 10 months of the year or 7.9 percent higher than the $14.23 billion recorded in the same period last year.
On the other hand, the country’s gross international reserves (GIR) - the sum of all foreign exchange flowing into the country - surged 39 percent to hit a new record level of $61.3 billion in the first 11 months of the year from $44.17 billion in the same period last year. This surpassed the latest revised GIR target of $60 billion.
Likewise, the country’s foreign portfolio investments hit a new record level of $4.18 billion as of end-November or almost 10 times the net inflow of $431.4 million in the same period last year while FDI inflows fell 31.8 percent to $1.093 billion in the first nine months of the year from $1.603 billion in the same period last year due to the decline in the inflows of equity capital.
Guinigundo said monetary authorities are now reviewing the country’s external payments position targets for next year to take into consideration the sharp increases registered so far this year.
“We are still running our numbers because we have to adjust our targets for 2011 although the increase is not going to be as high as this year. We did not expect the improvement to be that strong this year,” he stressed.
He pointed out that 2011 would continue to be strong for the country’s external payments position as it expects the GIR to hit $58 billion and the BOP surplus of amount to $1.9 billion next year.