March BOP turns to surplus, strongest in 13 months

THE Philippines’ external payments position reverted to a surplus in March, with the indicator posting its strongest showing in over a year, according to data from the Bangko Sentral ng Pilipinas (BSP).

The balance of payments ( BOP) surplus was $ 854 million, turning around from a $ 316- million deficit in February and from a $244-million deficit a year earlier.

Steady inflows brought the March BOP position to its highest level since the $985-million surplus of February 2015, according to central bank data.

The BOP is a measure of transactions with the rest of the world for a specific period. A surplus means that more funds flowed into the economy compared with outflows, increasing the supply of money available to buffer against external volatility.

BSP Deputy Governor Diwa C. Guinigundo said sustained inflows and steady investment allowed the country to bounce back to a surplus last month.

“The $ 854- million BOP surplus for March derived from continued inflows from remittances, BPO’s ( business process outsourcing) and tourist receipts,” Mr. Guinigundo said in a text message to reporters. “Capital flows-wise, we continue to see foreign direct investments and portfolio investments remaining generally resilient.”

Hot money posted a $482.43-million net inflow in March, with the BSP attributing the surge to “renewed investor interest” and positive sentiment strong investor appetite for emerging markets amid fresh signals of fewer rate hikes in the United States.

During its March 15-16 meeting, Federal Reserve Chairman Janet L. Yellen turned more dovish and hinted that authorities are now considering only two rate hikes this year, down from four initially expected as they maintained policy settings following a 25-basis-point hike in December.

Adding to the inflows were loan proceeds booked by the national government, as well as income from the central bank’s offshore investments, Mr. Guinigundo said.

Year- to- date, the country’s BOP position improved to a $275-million deficit from a $1.129-billion shortfall seen at end-February.

Looking ahead, the BSP said it still expects the figure to revert to a surplus in the coming months.

“We remain optimistic that we shall be able to achieve our BOP target of some $2.2 billion by the end of 2016,” Mr. Guinigundo said.

BSP Governor Amando M. Tetangco, Jr. earlier said that the deficit seen so far would only be “temporary” as remittances and BPO receipts pick up faster.

In 2015, the BOP surplus was $2.616-billion, well above the $2-billion target set for the year and reversing the $2.858-billion deficit seen in 2014.