PH posts $3.7-B BOP surplus in 2023

The Philippines recorded a balance of payments (BOP) surplus of $3.672 billion in 2023, surpassing the Bangko Sentral ng Pilipinas (BSP) projection of $1.1 billion for the year, and reversing the deficit incurred in 2022, largely due to improved trade, increased inflows and government’s higher foreign borrowings.

Based on BSP data released Friday, Jan. 20, the current BOP position is a reversal of the $7.263 billion deficit in 2022.

The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. It is an accounting of the economic dealings between residents and non-residents. A BOP surplus position means there are more exports or inflows than imports or outflows, while a deficit position is the opposite.

“This development (BOP surplus) reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the NG (National Government). Further, net inflows from foreign direct investments (FDI) contributed to the surplus, albeit lower during the period,” according to the BSP.

Based on preliminary data from the Philippine Statistics Authority’s International Merchandise Trade Statistics, the country incurred a trade deficit of $49 billion for the first 11 months of 2023, down from $53.7 billion deficit same period in 2022.

Meanwhile, overseas Filipinos’ cash remittances as of end-November 2023 totaled $30.211 billion, up from $29.38 billion same time in 2022. Net FDI as of end-October 2023 amounted to $6.553 billion, lower compared to same period in 2022 of $7.921 billion.

As for NG borrowings, the government issued $3 billion worth of 5.5-year, 10.5-year, and 25-year US dollar-denominated global bonds in early 2023. It also raised $1 billion from the sale of 5.5-year Sukuk bonds last November.

For the month of December 2023, the BSP recorded a BOP surplus of $642 million, higher than same time in 2022 of $612 million.

The BSP said the BOP surplus in December reflected inflows from the government’s net foreign currency deposits with the central bank, as well as net income from the BSP’s investments abroad and from its net foreign exchange operations.

Last Dec. 15, the BSP’s policy-making arm the Monetary Board approved revisions to the overall BOP outlook for 2023 and 2024.

For 2023, BSP changed its projection to $1.1 billion from a previous estimate of $100 million deficit.

For this year, the BSP revised the BOP forecast lower to $400 million surplus versus the earlier projection of $1 billion surplus.

BSP officials said that despite shortfalls in the current account that covers trade in goods, services, primary income such as investments, and secondary income such as remittances, the BOP in 2023 was in a much positive note in terms of trade and inflows position.

Prospects for 2024 is better amid the recovery of trade activity, strong growth in travel receipts and stable remittances. However, FDI will remain a challenge due to tighter financial conditions as well as lower business process outsourcing (BPO) revenues.

In general, the BSP said this year’s BOP outlook should be better than 2023’s sluggish external demand which contributed to some weak projections earlier on, such as in the exports and imports side, and the BPO sector. — Lee C. Chipongian