BSP reports $3.8-B balance of payment surplus

In first quarter

The Philippines continues to report a balance of payments (BOP) surplus of $3.797 billion as of end-March, reversing the $1.227 billion deficit same time last year, the Bangko Sentral ng Pilipinas (BSP) said.

For March only, the BOP was in excess of $627 million, the third month this year of monthly surpluses. Last year, the monthly BOP deficits were recorded for nine months, and only reporting surpluses in August, November and December.

In a statement, the BSP said the inflows in March “stemmed mainly from the National Government's (NG) net foreign currency deposits and the BSP's foreign exchange operations and income from its investments abroad. These were partially offset, however, by the payments made by the NG for its foreign exchange obligations during the month in review.”

The BSP said the first quarter cumulative surplus BOP, on the other hand, was on account of remittances from overseas Filipinos which as of end-February this year has reached $4.78 billion as cash or bank-transacted remittances, up three percent year-on-year.

“The surplus may be attributed partly to remittance inflows from overseas Filipinos and net inflows of foreign portfolio investments (net BSP-registered transactions based on custodian banks' reports) for the first two months of the year, and net inflows of foreign direct investments in January 2019,” said the BSP.

The BSP earlier reported net hot money inflows of $340 million in February which was lower than $763 million in January. As for net FDI, the BSP registered $609 million in January but it was 38.2 percent lower compared to same time in 2017 of $986 million.

In the meantime, the central bank noted that the latest BOP position reflected the final report on the country’s gross international reserves which amounted to $83.61 billion as of the end of the first quarter.

“At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 7.4 months' worth of imports of goods and payments of services and primary income. It is also equivalent to 5 times the country's short-term external debt based on original maturity and 3.5 times based on residual maturity,” said the BSP.

For 2019, the BSP earlier estimated another BOP deficit of $3.5 billion. The BSP projection is higher than the actual 2018 BOP shortfall of $2.306 billion. However, last year's BOP deficit was lower than what the BSP projected of $5.5 billion because of foreign exchange buying by the central bank, which boosted the US dollar buffer fund.