Philippines' dollar position back to a surplus in October

MANILA, Philippines — Fresh foreign currency deposits from the national government and earnings from the Bangko Sentral ng Pilipinas’ investments abroad brought over the country a dollar surplus in October.

What’s new

The country’s balance of payments position posted a $1.14 billion surplus in October, reversing a deficit recorded in September, the Bangko Sentral ng Pilipinas reported Wednesday. However, the latest figure was smaller compared with $3.44 billion surfeit chalked up a year ago.

In the first 10 months, the BOP position registered a surplus of $476 million.

Why this matters

The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. It serves as an accounting statement on the economic dealings between residents of the country and nonresidents. A BOP surplus happens when foreign fund inflows exceed outflows while a deficit occurs when the reverse takes place.

For this year, the BSP forecasts the BOP position to end with a $4.1 billion surplus, significantly lower than $16 billion surfeit recorded in 2020 as easing pandemic restrictions boost demand for dollars to pay for imports of goods and services needed to sustain a fragile economic recovery.

What the BSP says

The BSP said the surplus in October came from the national government’s foreign currency deposits to the central bank and earnings of the BSP’s investments abroad. 

What an analyst say

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in an emailed commentary: “Continued growth in OFW remittances especially to support adversely affected OFW dependents/families in the country by the pandemic and by higher inflation, as well as improved global economic prospects amid massive vaccination vs. COVID-19 that create more employment opportunities for OFWs (some repatriated OFWs since last year were already returned to work again), could fundamentally add to the BOP and GIR data.”

Other figures

• The central bank reported that the surplus padded the country’s dollar reserves to hit $107.89 billion as of October, which is sufficient to cover 10.8 months’ worth of payments of services and import requirements.