Philippines’ balance of payments (BOP) remained in surplus position as of end-October at $4.393 billion although lower compared to end-September’s $5.117 billion after the government settled its maturing foreign debts during the period.
Based on the latest data from the Bangko Sentral ng Pilipinas (BSP), the BOP dipped to a deficit of $734 million in October compared to the $3.526 billion surplus in September this year. The October shortfall decreased the overall BOP surplus for the first 10 months of 2024.
The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. A BOP surplus position means there are more exports or inflows than imports or outflows, while a deficit position is the opposite.
Data showed that the end-October surplus of $4.393 billion is higher compared to same period last year of $3.246 billion while the $724 million deficit for the month of October reversed the $1.51 billion surplus in 2023.
The BSP said there was a BOP deficit in October because of the National Government’s (NG) net foreign currency withdrawals from the central bank to pay for maturing foreign currency debts as well as to fund some NG expenses.
As for the cumulative BOP, the country maintained a healthy overall BOP surplus for the first 10 months due in part to net inflows coming from Overseas Filipinos’ remittances, trade in services, and NG’s foreign borrowings. “Furthermore, net foreign direct and portfolio investments contributed to the BOP surplus,” said the BSP.
Cash remittances sent home by Overseas Filipinos amounted to $25.226 billion as of end-September, up three percent year-on-year while net foreign direct investments and net “hot money” portfolio investments totaled $6 billion end-August and $3 billion end-September, respectively.
Meanwhile, along with the BOP, the BSP released the final gross international reserves (GIR) data which it reports twice in month, as preliminary data and final number.
The final GIR amounted to $111.083 billion as of end-October, down from $112.706 billion as of end-September. The initial GIR was reported at $112.434 billion last Nov. 8.
The BSP said the “BOP position reflects a decrease in the final (GIR) level.”
At $111.083 billion, the latest GIR level is still more than “adequate external liquidity buffer” that is equivalent to eight months’ worth of imports of goods and payments of services and primary income, said the BSP. It is also equivalent to about 4.4 times the country’s short-term external debt based on residual maturity.
In September, the BSP’s policy-making arm, the Monetary Board, revised the BOP forecasts for 2024 and 2025.
For 2024, the BSP forecasts BOP surplus will settle at $2.3 billion amid sustained funds and capital flows, global growth, increased trade and lower inflation. This was higher than its previous June estimate of $1.6 billion.
For 2025, the BOP surplus could decline to $1.7 billion. But, the BSP said the emerging risks to the country’s BOP numbers are still broadly balanced since the downside risks could be offset by upside factors.
The country’s moderating inflation which is expected to settle within the target range of two percent to four percent, sustained domestic growth, improving trade as well as the pickup in world trade activity next year, will bode well for the external side indicators in the coming months.