PHL external payment position turns around

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By Mark T. Amoguis
Senior Researcher

THE COUNTRY’s external financial position turned around in July from the preceding month and a year ago, fueled by dollar inflows from the central bank’s foreign exchange operations and income from its investments abroad, the Bangko Sentral ng Pilipinas (BSP) said in a press release on Monday.

The Philippines’ balance of payments (BoP) position posted a $248-million surplus in July, a turnaround from deficits of $404 million in June and $455 million in July last year.

The BoP measures the country’s transactions with the rest of the world at a given time. A surplus means more foreign funds entered the Philippines compared to what was taken out.

The central bank said inflows from the BSP’s foreign exchange operations and income from its investments abroad “were offset partially… by outflows which were reflected in the payments made by the NG on its foreign exchange obligations” in July, the central bank said in its press statement.

The BoP in the seven months to July reached $5.036 billion, similarly turning around from a $3.712-billion year-ago deficit.

The central bank attributed the seven-month surplus to remittance inflows from overseas Filipinos last semester as well as net inflows of foreign direct investments in the five months to May.

The central bank noted that the latest BoP reflects the final gross international reserve level of $85.18 billion as of July, “a more than ample liquidity buffer” equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

This also translates to 5.2 times the country’s debt falling due in a year as well as 3.8 times such short-term debt plus principal payments on medium- and long-term loans of both public and private sectors due within the next 12 months.

“The month-on-month change can be attributed to the global uncertainties brought by the general sentiment on the US-China trade war,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., said in an e-mail when sought for comment. “Inflows, portfolio and investment are influenced by how the protracted trade issues may conclude. These uncertainties may continue and may contribute to volatility in the BoP,” Mr. Asuncion said.

The central bank expects the country to book a BoP surplus of $3.7 billion this year, a turnaround from the $2.306-billion deficit recorded in 2018.