BOP surplus hits record $9.3 billion

MANILA, Philippines - The country’s balance of payments (BOP) surplus surged 75 percent in the first 10 months this year to hit a new record level of $9.276 billion and exceed the revised 2010 target of $8.2 billion set by monetary authorities.

As foreign equity continued to flood emerging markets including the Philippines, the Bangko Sentral ng Pilipinas (BSP) said the surplus booked in the first 10 months of the year already breached the previous all-time high of $8.557 billion registered in 2007.

The BOP refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world.

Originally, the BSP had expected the BOP surplus to hit only $3.2 billion this year but as early as June, this target only was already breached.

Furthermore, the BOP surplus booked in the first 10 months of the year was $3.977 billion higher than the $5.299 billion surplus registered in the same period last year.

BSP Governor Amando Tetangco Jr. said the strong inflows are expected to continue due to seasonal factors as higher remittances from overseas Filipinos in time for the Christmas season.

For the month of October alone, the country’s BOP surplus more than tripled to $2.736 billion from $896 million in the same month last year.

Tetangco explained that the payments for maturing debt obligations for October were not enough to offset the strong foreign exchange operations and investments abroad of the BSP.

“The BSP is mindful of the domestic liquidity implications of these foreign exchange inflows, and we continue to monitor developments. We are ready to calibrate any or all of the tools in our enhanced toolkit to ensure that the flows are orderly and do not create excessive volatilities,” he added.

The country’s BOP surplus surged to $6.421 billion in 2009 as it reflected the new treatment of allocation of Special Drawing Rights (SDRs) consistent with the guidelines of the BOP Manual 6th Edition from $89 million in 2008.

Monetary authorities attribute the country’s strong external payments position to the robust foreign exchange inflows from the higher investment inflows, disbursement of official development assistance (ODA) loans from multilateral lending agencies, and the money sent home by Filipinos abroad.