The country’s balance of payments will likely further improve in November and December on higher seasonal inflows of remittances and business process outsourcing revenues, an economist said over the weekend.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a report the factors for the improved BOP position would include increased remittances, revenues from business process outsourcing, tourism receipts and contributions from offshore gaming operations.
The Bangko Sentral ng Pilipinas reported on Friday that the BOP in October posted a surplus for the first time in seven months at $711 million, following a deficit of $2.3 billion in September.
This trimmed the year-to-date deficit to $7.11 billion from $7.83-billion shortfall as of end-September 2022.
“For the coming months, especially in November to December, BOP data could still improve with the improvement in the country’s structural inflows in terms of the seasonal increase in OFW remittances, BPO revenues, export revenues, foreign tourism receipts, POGO revenues, among others, in view of the holiday season,” Ricafort said.
Cash remittances coursed through banks grew by 3.8 percent to $2.84 billion in September from $2.74 billion recorded in the same month last year.
This brought cash remittances in the first nine months to $23.83 billion, up 3.1 percent from $23.12 billion registered a year ago.
Ricafort said these could be offset by the country’s trade deficit as the economy reopened further towards greater normalcy and some foreign debt payments scheduled in the fourth quarter.
“The continued decline in the prices of global crude oil [among the lowest since the latter part of January 2022 or before the Russia-Ukraine conflict started on February 24, 2022] and also the decline in other global commodities could help reduce the country’s trade deficit,” he said.
He said global crude oil and wheat prices already erased all their increase since the Russia-Ukraine war started amid risk of recession in the US, the world’s largest economy, and the continuing lockdowns in China.
Cash remittances hit a record $31.418 billion in 2021, up 5.1 percent from $29.903 billion in 2020. The 5.1-percent expansion last year was a significant improvement from the 0.8-percent contraction in 2020.
The BSP expects remittances to grow by 4 percent this year amid the improving global business environment.
BOP is the difference in total value between payments into and out of a country over a period.
The improved BOP position in October allowed the gross international reserves to rise to $94.0 billion from $93.0 billion in September.
The BSP said the latest GIR level represented a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. It was also about 6.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.