THE balance of payments position in June remained in surplus at $418 million, higher than $241 million in May, driven mainly by foreign exchange operations of Bangko Sentral ng Pilipinas, Governor Amando Tetangco Jr. said Tuesday.
The June figure was lower than the $485 million surplus a year ago and brought the balance of payments in the first half to a surplus of $634 million, significantly lower than $1.684 billion in the same period last year.
Tetangco said in a briefing the surplus was also driven by net dollar deposits and income from investments abroad. It was partially offset by the government’s debt servicing.
“The $2 billion target for BoP surplus this year remains doable due mainly to the expected sustained foreign exchange inflows for the rest of the year,” Tetangco said.
He noted marked improvements in the domestic financial markets, both equities and bonds, due mainly to positive developments overseas, especially in the United States and Japan. He said the stimulus program of Bank of Japan was providing positive sentiment to the Japanese economy.
Tetangco said there would be minimal impact to the domestic economy coming from the recent exit of the United Kingdom from the European Union.
“The claims of Philippine banks on UK and EU just account for 0.6 percent of the total assets of the domestic banking system,” Tetangco said.
The balance of payments summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments outstripping receipts and a surplus the reverse.
Persistent surpluses help build up the country’s gross international reserves, an ample supply of which helps prop up the peso vis-à-vis the US dollar and keep domestic inflation at bay.
Bangko Sentral in June last year revised downward the balance of payments projection this year to $2 billion from the earlier assumption of $2.2 billion made in December 2015 due mainly to the expected volatility in the global financial markets.
Bangko Sentral Deputy Governor Diwa Guinigundo said in a previous briefing while the global financial environment would remain volatile, the bullish business confidence was expected to support continued entry of foreign direct investments in the country.
He said Bangko Sentral considered global developments, such as the uncertainties coming from Brexit.
Guinigundo said the country’s domestic economy remained strong, adding monetary authorities considered the Philippines’ solid macroeconomic fundamentals in the revision of the BoP.