BOP surplus reaches $2.04 B in 7 months

MANILA, Philippines - The country’s balance of payments position recorded a $2.04 billion surplus in the first seven months of the year, exceeding the full-year target of $2 billion, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Deputy Governor Diwa Guinigundo said in a text message to reporters the seven-month surplus already exceeded the target for the whole of 2015.

The surplus in the first seven months of the year was also a complete reversal of the $3.64 billion deficit in the same period last year.

The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad.

A surplus means more money went into the economy, while a deficit means otherwise.

For July alone, the central bank said the country recorded a surplus of $354 million 29.3 percent lower compared to $501 million in the same month last year.

Guinigundo said the July surplus was derived from the BSP’s various foreign exchange operations including investments abroad and foreign exchange deposits from the government.

“This was made possible by the sustained foreign exchange inflows from remittances, business process outsourcing (BPO) sector, and foreign portfolio investments,” Guinugundo said.

According to him, the surplus position was moderated by the government’s external debt payments.

Last May, the BSP revised upwards its BOP forecast to a surplus of $2 billion instead of the earlier projected surplus of $1 billion. It also raised the country’s current account surplus forecast to $14.2 billion instead of an earlier estimate of $6.8 billion.

However, Guinigundo said the central bank said external developments including the impending interest rate hike by the US Federal Reserve as well as the recent weakening of the Chinese yuan and Vietnamese dong could affect foreign exchange markets in the region.

“BSP remains cautiously optimistic that we would meet our BOP target against the backdrop of the impending lift off in the US and the volatilities in the foreign exchange markets driven by the devaluation of both the yuan and the dong,” Guinigundo said.

Monetary authorities are confident the Philippines would be able to withstand external shocks on the back of the country’s strong and sound macroeconomic fundamentals.

“This cautious optimism owes to the strong fundamentals of the Philippine economy and the structural flows that have proven to be resilient,” Guinigundo said.