Small BOP surplus posted in September

The country’s balance of payments (BOP) had a modest $24-million surplus account in September, minutely adjusting the nine-month BOP deficit to $1.367 billion, according to Bangko Sentral ng Pilipinas (BSP) data.

The same period last year, the BSP recorded a September surplus of $117 million and at the time, year-to-date BOP position was also in surplus of $1.648 billion.

This was the second time this year that a monthly BOP data showed a surplus position, the first time was in April with $917 million. The rest of the time, the BOP was consistently in shortfall reflecting the slowed inflows and portfolio investment outflows. A BOP – the summary of a country’s economic transactions with the rest of the world – is in deficit if there are more payments versus inflows.

BSP Governor Nestor A. Espenilla Jr. said the deficit position is “sustainable and represents less than one percent of GDP” and it could be “readily financed.”

“The balance of payments deficit can be attributed, in part, to stronger growth in imports as the economy continues to expand rapidly and ramps up investments,” Espenilla said in his speech delivered during the 43rd Philippine Business Conference and Expo on Wednesday. “The deficit also reflects rebalancing of portfolio capital flows in line with potential monetary policy normalization in advanced economies. Similarly, some residents are pre-paying their foreign debt to manage their risk exposures.”

The BSP said earlier that several factors led to the fund outflows such as the US Federal Reserve interest rate hike, global terrorism concerns, and closure orders for some mining companies in the country.

For 2017, the BSP expects a BOP deficit of $500 million. Last year, the BOP shortfall was at $420 million.

The BSP is confident that external account deficiency will remain manageable, supported by a sufficient level of foreign exchange reserves above $80 billion.