MANILA, Philippines — The country’s balance of payments (BOP) position remained in a surplus for a second straight month in August, shifting from a deficit a year ago, mainly due to the central bank’s net income from investments abroad.
Based on data released by the Bangko Sentral ng Pilipinas (BSP), the country’s BOP surplus stood at $88 million in August, a reversal of the $57-million gap recorded in the same month last year.
On a monthly basis, the surplus rose by nearly 42 percent from the $62-million excess in July. The August figure marked the highest surplus in three months or since the $1.9 billion in May.
“The BOP surplus in August 2024 reflected inflows mainly from the net income from the BSP’s investments abroad,” the central bank said.
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 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.
For the first eight months, the country’s BOP position stood at a surplus of $1.6 billion, 24 percent lower than the $2.1 billion in the same period a year ago.
“Based on preliminary data, this cumulative BOP surplus reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, trade in services, net foreign direct investments (FDI), net foreign borrowings by the national government and net foreign portfolio investments,” the BSP said.
Data from the Philippine Statistics Authority showed the country’s trade deficit narrowed by 5.8 percent to $29.91 billion from January to July versus last year’s $31.75 billion.
During the seven-month period, imports declined slightly to $72.57 billion from $73.33 billion, while exports rose by 2.6 percent to $42.66 billion from $41.58 billion.
In the same period, personal remittances rose by three percent to $21.53 billion from $20.91 billion, of which cash remittances coursed through banks grew by 2.9 percent to $19.33 billion from $18.79 billion.
These strong inflows were enough to offset the 29 percent decline in FDI inflow to $4.44 billion in the first half from $4.11 billion in the same period last year.
“The BOP position reflects an increase in the final gross international reserves (GIR) level to $107.9 billion as of end-August from $106.7 billion as of end-July,” the BSP said.
The GIR level is equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income. It is also about six times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the measure of the country’s cash flow statement with the rest of the world is expected to remain in surplus in the coming months due to more inflows.
He said the BOP data could improve due to proceeds of the national government’s dollar-denominated bond issuances, narrower trade deficit as well as continued growth in remittances, FDIs and other structural dollar inflows.
The BSP sees the country’s BOP surplus at $1.6 billion (0.3 percent of gross domestic product) for this year and $1.5 billion (0.3 percent of GDP) in 2025.