THE Philippines posted an $839-million surplus in its balance of payments (BoP) position in February, as import demand slowed due to the uncertainty over the coronavirus outbreak.

Analysts said that the BoP surplus could further widen in the near term, as they expect import demand to continue to weaken amid the pandemic.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the February BoP position swung to a $839-million surplus from a $1.355-billion deficit in January, and is bigger than the $467-million surplus a year ago.

“The BoP surplus in February 2020 reflected mainly the inflows arising from the national government’s foreign currency deposits with the BSP, and BSP’s foreign exchange operations as well as income from its investments abroad,” the BSP said in a statement on Wednesday.

However, the inflows were offset by the national government’s payments in servicing foreign currency debt obligations during the month.

At this level, the BSP said that the BoP position also reflects a final gross international reserves (GIR) of $88.19 billion, which is enough liquidity buffer that can cover 7.8 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.1 times of the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.

Meanwhile, the BoP position in the first two months of the year swung to a deficit of $516 million, a reversal from the $3.17 billion surplus seen in the January-February 2019 period.

The BoP is a gauge to show the country’s economic transactions with the rest of the world at a given time. A surplus shows more money flowed into the country while a deficit means more funds exited the economy than what went in.

In projections made last November, the central bank expects the BoP position at a surplus of $3 billion and the GIR to be at $86 billion by end-2020.

Economists attributed the surplus in February to lower imports, a stronger peso, and firm dollar reserve levels.

“Growing uncertainty about the then mysterious virus may have stopped import demand, which was also lower in dollar terms after crude oil retreated,” ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mailed reply.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the surplus to the continued resilience of the peso.

“In February, the peso’s relative strength was key, as COVID-19 wreaked havoc in China. Its strength was obvious even as the country was dealing with its own COVID-19 outbreak in March and now even in April,” he said. “The BoP has benefitted largely on the peso’s resilience in the past months.”

Stable gross international reserves as well as inflows from remittance and business process outsourcing also contributed to the February BoP surplus, according to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“The wider BoP surplus may also reflect and consistent with the record high GIR levels recently,” he said in an e-mail. “Furthermore, the country’s structural dollar inflows continued to grow such as OFW remittances and BPO revenues.”

Analysts said the BoP may edge towards a wider surplus in the next few months.

“For the coming months, BoP surplus could still be posted in view of the further sharp decline in global oil prices to new 18-year lows starting March 2020 that could further lead to lower oil imports and further narrowing of the trade deficit or net imports,” Mr. Ricafort said.

ING’s Mr. Mapa said the COVID-19 will take its toll on the country’s current account (CA) and financial account.

“CA deficit to be driven by weaker remittance flows and BPO receipts likely impaired by COVID-19 while import demand to resume after ECQ (enhanced community quarantine) to fuel the governments sustained ‘Build, Build, Build’ agenda,” Mr. Mapa said. — L.W.T.Noble

RELATED ARTICLESMORE FROM AUTHOR