A bank employee counts US dollar notes in this file photo from May 16, 2016. — REUTERS

THE country’s balance of payments (BoP) saw a bigger surplus in May on the back of the National Government’s foreign borrowings and a narrower merchandise trade deficit.

Data from the Bangko Sentral ng Pilipinas (BSP) released Wednesday showed the country’s BoP position was at a surplus of $2.431 billion in May, its fourth successive month in surfeit. This is wider than both the $928-million surplus recorded a year ago and the $1.666-billion surfeit in April.

The May surplus is also the highest since January 2019’s $2.704-billion surfeit.

The BoP shows the country’s economic transactions with the rest of the world within a given period.

The central bank in June revised its BoP projection to a surplus of $600 million for 2020, slimmer than the $3-billion surfeit estimate it gave in November last year. The new projection represents 0.2% of the country’s gross domestic product.

“The BOP surplus in May 2020 reflected mainly the inflows arising from the National Government’s foreign currency deposits with the BSP as well as the BSP’s foreign exchange operations and income from its investments abroad,” the BSP said.

Inflows were partially offset by foreign currency withdrawals by the National Government meant to pay foreign currency debt obligations.

Year to date, BoP position remained at a surplus of $4.03 billion in May. However, this was thinner than the $5.19-billion surplus logged in the January to May 2019 period.

“The current BoP surplus was supported mainly by foreign borrowings by the National Government in April and May, coupled with lower merchandise trade deficit and by sustained net inflows of personal remittances from overseas Filipinos. These inflows fully negated the impact of lower trade in services receipts, the net foreign portfolio investment outflows and lower foreign direct investments inflows,” the central bank said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail the May surplus reflected “increased borrowings from multilaterals and commercial sources to finance stimulus spending and other COVID-19 (coronavirus disease 2019) programs.”

“Government has been aggressive in building its COVID financing war chest with roughly $5 billion in loans on top of a fresh RoP (Republic of the Philippines) [global bond] issuance, offsetting portfolio outflows linked to the risk-off sell down,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

The government has so far secured $6.508 billion in loans, bond issuances and grants to fund its response for the pandemic, according to the Department of Finance.

Meanwhile, the trade deficit was at $499.21 million in April, much lower than the $3.8-billion gap in $3.8 billion seen a year ago and the smallest in five years or since the $257.18-million trade gap in March 2015 and the $64.95-million trade surplus in May 2015.

This, as merchandise imports declined 65.3% to $3.28 billion in April while exports fell 50.8% to $2.78 billion.

The BSP also said the BoP reflects the country’s gross international reserves at record high of $93.29 billion as of end-2020, surpassing the $90- billion buffer target for 2020.

“At this level, the GIR represents an ample external liquidity buffer, which is equivalent to 8.4 months’ worth of imports of goods and payments of services and primary income,” the central bank said.

The dollar reserves is also about seven times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity. — Luz Wendy T. Noble