The Philippines posted a balance of payments surplus of $2.616 billion in 2015, surpassing the target of $2 billion, data from Bangko Sentral ng Pilipinas on Tuesday show.
The surplus was a reversal of the $2.858-billion deficit in 2014. The BoP in December stood at a surplus of $481 million, a reversal of the $141-million deficit a month ago and $864-million deficit a year ago.
Bangko Sentral in December retained its BoP surplus assumption of $2 billion in 2015 due to expected lower current account surplus, weighed down by sluggish exports.
The balance of payments summarizes the country’s economic transactions with the rest of the world, with a deficit indicating foreign exchange payments outstripping receipts and a surplus the reverse.
Persistent surpluses help build up the country’s gross international reserves, an ample supply of which helps prop up the peso vis-à-vis the US dollar and keep domestic inflation at bay.
The balance of payments position in 2016 is projected at a surplus of $2.2 billion, as the global growth outlook is seen improving. Another reason is the continued favorable growth prospects of the domestic economy.
The projected surplus in the overall BoP this year is seen to result in an increase in the 2016 GIR level to $82.7 billion from $80.61 billion in 2015.
Last year’s GIR missed the official target of $80.7 billion due mainly to the government’s settlement of foreign exchange obligations.
The end-December GIR level remained ample as it can cover 10.3 months’ worth of imports of goods and payments of services and income. It is also equivalent to 5.5 times the country’s short-term external debt based on original maturity and 4 times based on residual maturity.
The reserves this year are projected to increase to $82.7 billion, or equivalent to 9 months’ import cover, from $80.7 billion (nearly 10 months import cover) in 2015.
The increase would be triggered by the expected improvement in the overall balance of payments position this year to $2.2 billion.
The current account in 2016 is expected to remain in surplus at $5.7 billion but lower compared with the $8.9 billion in 2015 due mainly to the expected large increase in the imports of goods, notwithstanding improvements in the services and secondary income accounts.
“Overall, the Bangko Sentral forecasts the external position of the Philippines improving in 2015 and 2016 from a deficit in 2014,” Bangko Sentral said.
In 2014, the country’s BoP posted the biggest deficit on record driven mainly by the normalization of monetary policy in the United States.
The BoP in 2014 registered a deficit of $2.858 billion, lower than the BSP projection of $3.4-billion gap for the year.