BoP reverts to surplus, reaches $3.7 B last year

The country’s balance of payments (BOP) position reverted to a surplus, hitting $3.67 billion last year and reversing the $7.26 billion deficit recorded in 2022, according to the Bangko Sentral ng Pilipinas (BSP).

The amount was more than three times the BSP’s latest BOP surplus projection of $1.1 billion.

“Based on preliminary data, this development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services and foreign borrowings by the national government,” the BSP said.

The central bank said that net inflows from foreign direct investments (FDI) also contributed to the surplus.

BSP director Redentor Paolo Alegre Jr. said the BOP is a summary of the country’s economic transactions with the rest of the world for a specific period.

A surplus means more dollars flowed into the country from exports, remittances from overseas Filipino workers, business process outsourcing earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

For December alone, the country posted a $642-million BOP surplus, almost five percent higher than the $612 million excess recorded in the same month in 2022.

“The BOP surplus in December 2023 reflected inflows arising mainly from the national government’s net foreign currency deposits with the BSP, net income from the BSP’s investments abroad and the BSP’s net foreign exchange operations,” the central bank said.

Latest data from the Philippine Statistics Authority showed the country’s trade deficit from January to November last year narrowed by 8.8 percent to $48.98 billion compared to the previous year’s $53.72 billion.

Exports contracted by 8.4 percent to $67.03 billion from January to November last year versus the previous year’s $73.18 billion, while imports declined at a faster rate of 8.6 percent to $116.01 billion from $126.9 billion.

Personal remittances also grew by 2.9 percent to $33.58 billion from January to November last year, of which cash remittances coursed through banks inched up by 2.8 percent to $30.21 billion.

The net FDI inflow declined by 17.5 percent to $6.53 billion from January to October last year versus the previous year’s $7.92 billion, reflecting the adverse impact of persistent inflationary pressures and slowing global growth prospects on investor decisions.