BoP position remains in surplus

THE COUNTRY’S balance of payments (BoP) position yielded a surplus for a second straight month in August on foreign currency deposits from the government and income from the central bank’s offshore investments, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.

Data released by the central bank yesterday showed the BoP position — which shows the summary of the country’s economic transactions with the rest of the world for a given period — stood at a $493-million surplus in August. This is wider than July’ $248-million surfeit but narrower compared to the $1.272-billion surplus seen in the same month last year.

The central bank attributed the August surplus to inflows from the “national government’s (NG) net foreign currency deposits and BSP’s income from its investments abroad.”

“These inflows were offset partially, however, by outflows representing payments made by the NG on its foreign exchange obligations during the month in review,” the central bank said.

August’s figure brought the eight-month tally to a $5.529-billion surplus, a turnaround from the $2.44-billion BoP deficit booked in the same period last year.

“The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first seven months of the year, and to net inflows of foreign direct investments and portfolio investments during the first half of the year,” the BSP said.

The central bank said the latest BoP position also reflects the final gross international reserve (GIR) level of $86.03 billion as of August 2019.

“At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.5 times the country’s short-term external debt based on original maturity and four times based on residual maturity,” the BSP added.

Rizal Commercial Banking Corp. chief economist Michael L. Ricafort attributed the narrower BoP surplus in August from a year ago to volatility in local financial markets due to geopolitical concerns like the escalation of the US-China trade war and the protests in Hong Kong, the inversion of the US yield curve, and the ghost month, among others.

“This surplus position, after eight months so far, is positive for the peso and may strengthen the peso further amidst the volatility brought by the uncertainties from the recent geopolitical concerns and the protracted trade issues between the US and the PRC (People’s Republic of China),” UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said.

The central bank expects the country to book a BoP surplus of $3.7 billion this year, a turnaround from the $2.306-billion deficit recorded in 2018. — L.W.T. Noble