May 21, 2019
THE country’s overall balance of payments (BOP) position posted a $467-million surplus in April, reversing the $270-million deficit recorded in the same month last year, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.
In a statement, the central bank attributed last month’s surplus — which mirrored the amount registered in February, but is lower than January’s $2.70 billion and March’s $627 million — to its “foreign-exchange operations and income from its investments abroad,” as well as the government’s “net foreign currency deposits.”
These were partially offset, however, “by the payments [the government made] for its foreign-exchange obligations during the month in review,” it added.
On a cumulative basis, the BOP position for the first four months registered a surplus of $4.27 billion, a turnaround from the $1.5-billion deficit recorded in the same period last year.
“The [four-month] surplus may be attributed partly to remittance inflows from overseas Filipinos (OF) and net inflows of foreign portfolio investments (net BSP-registered transactions based on custodian banks’ reports) during the first quarter of the year, and net inflows of foreign direct investments in first two months of 2019,” BSP said.
ING Bank Manila senior economist Nicholas Antonio Mapa said the April 2019 surplus was achieved through improvements seen in the financial account, despite the continued presence of a current account deficit.
That account likely saw a strong surplus after portfolio flows remained positive, while the government issued foreign currency debt in the January-to-April period.
The current account, on the other hand, likely remained in the red, Mapa added, but was possibly a little narrower, with OF remittance growth seen to offset some of the deficit from the trade gap.
“We expect the Philippines to continue to see months of surplus with the external position less vulnerable in 2019 as the Philippines looks to see heavier reliance on the financial account even as the current account remains in deficit,” the economist said.
“Meanwhile, we also expect the current account to narrow, on sustained growth in OF remittances and BPO (business process outsourcing) receipts, which are seen to counter a slightly narrower trade deficit on the back of slowing imports with capital goods seeing only single digit growth of late,” he added.
The current BOP position reflected the final gross international reserves (GIR) level of $83.88 billion as of end-April, BSP said.
At this rate, the GIR represents a more than ample liquidity buffer and is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income, it added.
The central bank also said the amount was equivalent to five times the Philippines’ short-term external debt, based on original maturity and 3.5 times based on residual maturity.
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