BOP swings to surplus on higher BSP income

MANILA, Philippines — The country’s balance of payments (BOP) swung to a surplus of $359 million in August, the highest in two months, as the Bangko Sentral ng Pilipinas (BSP) booked higher income from its overseas investments.

The latest figure was more than four times the $88 million surplus recorded in the same month last year and was also a turnaround from the $167 million deficit in July.

“The BOP surplus reflected the BSP’s net income from its investments abroad,” the central bank said in a statement.

The BOP is a record of all the financial transactions between a country and the rest of the world over a specific period. It captures everything that brings money in and everything that sends money out.

A surplus means the country received more foreign currency than what it spent, indicating stronger inflows from trade, investments or remittances.

The August inflow helped narrow the year-to-date deficit to $5.4 billion from $5.8 billion in the January to July period.

According to the BSP, the country remained in the red on a cumulative basis as the persistent trade-in-goods deficit continued to weigh on the external accounts.

Data from the Philippine Statistics Authority showed that the trade deficit in the seven months to July settled at $28.5 billion, down from the $29.9 billion deficit posted in the same period a year ago.

This was partly offset by sustained net inflows from personal remittances, foreign borrowings by the national government, foreign direct and portfolio investments as well as trade in services.

The BOP improvement was mirrored by a rise in the country’s gross international reserves (GIR), which climbed to $107.1 billion as of end-August from $105.4 billion a month earlier.

The current GIR level is adequate to cover 7.2 months’ worth of imports of goods and payments of services and primary income, and is 3.7 times the country’s short-term external debt based on residual maturity.

The GIR, composed of foreign securities, foreign exchange, gold and other assets, serves as the country’s buffer to finance imports and debt obligations, stabilize the peso and guard against external shocks.

The BSP expects the BOP position to hit a shortfall of $6.3 billion this year.