The Philippines posted a balance of payments surplus of $2.9 billion in the first five months amid the continued structural dollar inflows in the country, a reversal from the $1.5-billion deficit recorded in the same period last year, the Bangko Sentral ng Pilipinas said Tuesday.
Data showed that the BOP position resulted in a lower deficit of $439 million in May, compared to the $1.6-shortfall a year ago. The latest figure reflected outflows arising mainly from the national government’s net foreign currency withdrawals from its deposits with the BSP to settle foreign currency debt obligations and pay for various expenditures.
“Based on preliminary data, this cumulative BOP surplus was partly attributed to net inflows from personal remittances, net foreign borrowings by the national government, trade in services and foreign direct investments,” the BSP said.
BOP refers to the difference in total value between payments into and out of a country over a period.
Meanwhile, the gross international reserves decreased to $100.6 billion as of end-May from $101.8 billion as of end-April. The latest GIR level represented a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.
It was also about 5.8 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the $439-million BOP deficit in May was the widest since February 2023.
Ricafort said that in the coming months, the BOP data “could still improve with the continued increase in the country’s structural inflows—such as OFW remittances, BPO and exports revenues and tourism receipts.”
The BSP reduced last week its BOP forecast for 2023 to a deficit of $1.2 billion from a previous estimate of $1.6-billion shortfall on the back of the narrowing trade deficit.
“For 2023, the overall BOP position is seen to register a lower deficit relative to the March 2023 projection exercise. This development is underpinned largely by a narrower merchandise trade gap, as goods imports growth is expected to slow down sharply following the pullback in international prices of major commodities, particularly fuel. This is accompanied by a sustained fall in goods exports as global demand weakens further,” it said in a statement.
The BSP said despite the optimism attached to the reopening of China’s economy, such a view remained tentative given its numerous domestic challenges including the declining property sales and real estate investments.
Latest Philippine Statistics Authority data showed that the trade-in-goods deficit, or the difference between the value of exports and imports, reached $4.53 billion in April, down from $5.32 billion a year ago.
The BSP expects a lower BOP deficit of $500 million for 2024.
The International Monetary Fund expects global economic activity and trade to rise by 3.0 percent and 3.5 percent in 2024, respectively, both higher than their 2023 forecasted growth rates.
The BSP said these developments bode well for the country’s trade and investments prospects for next year, with the downturn in the global semiconductor market predicted to bottom out by the middle of 2023 and into 2024.