July BOP swings to $62 million surplus

MANILA, Philippines — The country’s balance of payments (BOP) surplus stood at $62 million in July, a turnaround from the $53-million deficit a year ago and the $155-million shortfall in February, the Bangko Sentral ng Pilipinas (BSP) said.

“The BOP surplus in July reflected inflows mainly from the net income from the BSP’s investments abroad and the national government’s net foreign currency deposits with the BSP,” the central bank said in a statement.

The BOP is the difference in total values between payments into and out of the country over a period.

A surplus means more dollars flowed into the country from exports, remittances, business process outsourcing earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

For the January to July period, the BOP surplus fell by 31.8 percent to $1.5 billion from $2.2 billion in the same period in 2023.

According to the BSP, the year-to-date BOP surplus reflected the narrower trade deficit alongside continued inflows from personal remittances, foreign direct investments, external borrowings of the government and foreign portfolio investments.

Latest data from the Philippine Statistics Authority showed that the country’s trade deficit narrowed by 9.5 percent to $25 billion in the first half of the year compared to last year’s $27.63 billion.

For June alone, the Philippines posted a trade deficit of $4.3 billion, the narrowest since the $3.35 billion deficit last March.

Likewise, personal remittances grew by 2.9 percent to $18.1 billion in the first half from $17.59 billion in the same period in 2023. Out of the six-month total, cash remittances coursed through banks also increased by 2.9 percent to $16.25 billion from $15.7 billion.

The BSP said the BOP surplus reflects a gross international reserve level of $106.7 billion as of end-July, up from $105.2 billion as of end-June.

The level is equivalent to around 7.9 months’ worth of imports of goods and services and payments of primary income.

It 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 buffer ensures the availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service in extreme conditions when there are no export earnings or foreign loans.

The BSP sees the country’s BOP surplus at $1.6 billion or 0.3 percent of gross domestic product for this year. It also projects a BOP surplus of $1.5 billion or 0.3 percent of GDP in 2025.