Philippines’ balance of payments (BOP) swung to a surplus position of $1.596 billion as of end-May due in part to government foreign currency deposits to the Bangko Sentral ng Pilipinas (BSP) after raising $2 billion via a dollar bond sale in May.
Based on the latest BSP data, the country posted a BOP surplus of $1.997 billion for the month of May, reversing the $439 million deficit same time in 2023.
This brought the five-month BOP to $1.596 billion but still lower compared to same period last year of $2.866 billion.
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.
The BOP surplus in May was boosted by National Government (NG) net foreign currency deposits with the BSP such as proceeds from last month’s $2 billion dual-tranch 10-year and 25-year fixed-rate Global Bonds. The BSP also registered additional net income from its investments abroad.
In a statement, the BSP said the cumulative BOP surplus of $1.596 billion “reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, net foreign borrowings by the NG, foreign direct investments, foreign portfolio investments, and trade in services.”
Based on preliminary data from the Philippine Statistics Authority’s International Merchandise Trade Statistics, the trade deficit for January to April this year totaled $16.3 billion, which was lower than $19.3 billion deficit posted same period in 2024.
Meanwhile, along with the BOP, the BSP releases the final gross international reserves (GIR) number which it reports twice in month, as preliminary data and final number.
The BSP said the GIR amounted to $105.015 billion as of end-May, up from $102.647 billion as of end-April. Last June 10, the BSP initially reported a GIR of $104.48 billion.
It noted that the latest GIR level is “more than adequate external liquidity buffer” which can pay for 7.7 months’ worth of imports of goods as well as for services and primary income.
The country’s US dollar reserves are also equivalent to about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity. Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
Last June 13, the BSP’s policy-making arm, the Monetary Board, revised the BOP forecasts for 2024 and 2025 amid the changing external accounts, the expected global economic recovery, and the country’s lower inflation.
For 2024, the BSP forecasts a higher BOP surplus of $1.6 billion versus its March 15 estimate of only $700 million.
For 2025, the BSP is projecting $1.5 billion BOP surplus, an improvement from its previous estimate of $500 million deficit.
BSP Director Sittie Hannisha M. Butocan of the Department of Economic Research said there are key considerations in revising the previous BOP projections, namely the faster pace of global growth, easing global inflation and the recovery in the global electronics demand. The downside is the moderate China growth and increased political and economic uncertainty including geopolitical tensions and weather-related shocks.
On the local side, they see steady growth, a lower inflation trajectory and sustained public investments in infrastructure. The downside is on the weaker-than-expected gross domestic product in the first quarter, impact of higher BSP interest rates and bad weather conditions.
For this year, the BSP also forecasts a GIR of $104 billion. This was higher than the March 15 projection of $103 billion. For 2025, the GIR is expected to be higher at $105 billion.