The Philippines balance of payments (BOP) position registered a $1.04 billion surplus in August, resulting in lower deficit in the first eight months of the year, the central bank reported.

Data from the Bangko Sentral ng Pilipinas (BSP) showed Thursday, Sept. 23 that the BOP surplus last month brought down the January to August shortfall to just $253 million, well below than the end-July level of $1.3 billion.

The August BOP surplus was also higher than the $657 million in same month last year.

“The BOP surplus in August reduced the cumulative BOP deficit (while the) current year-to-date BOP level is a reversal from the $4.77-billion surplus recorded in the same period a year ago,” the BSP said.

“Based on preliminary data, this cumulative BOP deficit was partly attributed to a wider merchandise trade deficit and lower net foreign borrowings by the NG (national government) compared to the same period last year,” the central bank added. 



The additional $2.78 billion in special drawing rights (SDR) allocation from the International Monetary Fund (IMF) also fueled the August surplus. 



“The BOP surplus in August was due mainly to the additional allocation of SDR to the Philippines given the IMF’s efforts to increase global liquidity amid the pandemic and the BSP’s income from its investments abroad,” the BSP said. 



However, these were partly offset by the national government’s foreign currency withdrawals from its deposits with the BSP to settle foreign currency debt obligations and other expenditures.

Moreover, the BSP’s net foreign exchange operations also dragged down the BOP surplus last month.



Meanwhile, the BSP reported that the final gross international reserves (GIR) at end-August reached $107.96 billion, slightly more than $107.15 billion in the previous month. 



The latest GIR level is sufficient enough as external liquidity buffer. It is equivalent to 10.8 months’ worth of imports of goods and payments of services and primary income, and about 7.6 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity.



The BOP report is a comprehensive review of the country’s current account or the trade-in-goods and services, income, and current transfers, as well as the capital and financial accounts which are direct, portfolio and other investments. 



The BSP on Sept. 16 approved several revisions to the external accounts, such as a lower BOP surplus estimate for 2021 of $4.1 billion versus previous estimate of $7.1 billion. 



For 2022, the BSP also downgraded its BOP surplus projection to $1.7 billion from $2.7 billion. 

BSP Managing Director Zeno R. Abenoja earlier said the main reason for adjusting the BOP outlook is the lower current account, one of the key components of the BOP.

The current account surplus which in June was projected at $10 billion for 2021 has been reduced to $3.5 billion. For 2022, the current account will likely be a deficit of $1.4 billion, reversing the previous projection of $6.7-billion surplus.

As of end-June, the current account reversed to a deficit of $1.2 billion from a surplus of $4.8 billion same period in 2020, due to a bigger trade deficit and lower net receipts of primary income.