US one-hundred-dollar notes are seen in this picture illustration taken in Seoul Feb. 7, 2011. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

THE COUNTRY’S balance of payments (BoP) position swung to a surplus in May, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The central bank reported that the BoP position stood at a surplus of $1.997 billion, a turnaround from the $439-million deficit a year ago.

The country had a $639-million gap in April, while May saw the biggest monthly surplus since $3.081 billion in January 2023.

Philippines: Balance of Payments (BoP) Position

The BoP shows a glimpse of the country’s transactions with the rest of the world. A surplus shows that more funds came into the country, while a deficit means more money fled.

“The BoP surplus in May 2024 reflected inflows arising mainly from the National Government’s (NG) net foreign currency deposits with the BSP, which include proceeds from its issuance of Republic of the Philippines global bonds, and net income from the BSP’s investments abroad,” the central bank said.

The government raised $2 billion from its issuance of the dual-tranche, 10- and 25-year fixed-rate dollar bonds in May. It was the Philippines’ first global bond sale this year.

In the first five months, the BoP surplus shrank by 44.3% to $1.596 billion from $2.866 billion a year ago.

“Based on preliminary data, this cumulative BoP surplus reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, net foreign borrowings by the NG, foreign direct investments, foreign portfolio investments, and trade in services,” the BSP said.

Latest data from the local statistics agency showed the trade deficit shrank by an annual 15.7% to $16.27 billion in the January-to-April period.

At its end-May position, the BoP reflects a gross international reserve (GIR) level of $105 billion, up by 2.3% from $102.6 billion as of end-April.

The level of dollar reserves was enough to cover 7.7 months of imports and payments of services and primary income. It was also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.

An ample level of foreign exchange buffers safeguards an economy from market volatility and is an assurance of the country’s capability to pay debts in the event of an economic downturn.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the growth in cash remittances would help support the BoP position.

“This bodes well for the Philippine peso as it suggests a healthy balance of payments surplus. While the peso has weakened slightly so far this year, a potential rise in tourism and business process outsourcing (BPO) could help it recover,” he said in a Viber message.

Separate BSP data showed that cash remittances rose by 2.8% to $10.782 billion for January to April.

In May, the peso sank to the P58-per-dollar level for the first time since November 2022. 

“We expect a BoP surplus for the year and a slightly stronger peso by yearend,” Mr. Roces added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the BoP position could improve and lead to an increase in gross international reserves in the coming months.

Mr. Ricafort said this could be due to global bond issuances this year, as well as official development assistance.

The government’s borrowing plan is set at P2.57 trillion this year, 25% of which will come from foreign sources.

Mr. Ricafort also cited the continued growth in OFW remittances, BPO revenues, foreign tourism receipts and other structural US dollar inflows as factors that will boost the BoP position.

The central bank projects a BoP surplus of $1.6 billion this year, equivalent to 0.3% of gross domestic product.