BOP reverses to $2 billion surplus

May figure biggest in 16 months

MANILA, Philippines — The country’s balance of payments (BOP) position shifted to a surplus in May, hitting $2 billion and reversing the $439 million deficit recorded in the same month a year ago, the Bangko Sentral ng Pilipinas (BSP) said. The BOP surplus in May was also a turnaround from the $639 million shortfall in April. It was the biggest surplus since the $3.08 billion in January 2023.

“The BOP surplus in May 2024 reflected inflows arising mainly from the national government’s net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds, and net income from the BSP’s investments abroad,” the central bank said.

The BOP summarizes the country’s economic transactions with the rest of the world for a specific period. A surplus means more dollars flowed into the country from exports, remittances from overseas Filipino workers, business process outsourcing earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

With the huge surplus in May, the cumulative BOP position reverted to a surplus of $1.6 billion in the first five months of the year. However, the amount was 44.3 percent lower than the $2.9 billion surplus in the same period last year.

“Based on preliminary data, this cumulative BOP surplus reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, net foreign borrowings by the national government, foreign direct investments, foreign portfolio investments, and trade in services,” the BSP said.

Latest data from the Philippine Statistics Authority showed that the country’s trade deficit from January to April declined by 15.7 percent to $16.27 billion from $19.29 billion in the same period a year ago.

Personal remittances also grew by 2.8 percent to $12.01 billion from January to April, of which cash remittances coursed through banks inched up by 2.8 percent to $10.78 billion.

The BOP position reflects an increase in the final gross international reserves (GIR) level to $105 billion as of end-May from $102.6 billion as of end-April 2024.

The foreign exchange buffer represents a more than adequate external liquidity equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.

The GIR level is also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.

The BSP earlier raised its BOP surplus forecast to $1.6 billion (0.3 percent of gross domestic product) for this year from the original target of $700 million (0.1 percent of GDP).

For next year, the projected BOP surplus now stands at $1.5 billion (0.3 percent of GDP), a turnaround from the $500-million deficit (-0.1 percent of GDP) previously givenin the first quarter.