The country’s overall balance of payments position, an important indicator that influences the value of the peso and foreign reserves, rebounded with a surplus of $1.27 billion in August, data from the Bangko Sentral ng Pilipinas show.
It marked the first time that the monthly BoP yielded a surplus this year, improving from a $455-million deficit in July and a $7-million shortfall recorded in August 2017.
Inflows in August stemmed mainly from net foreign currency deposits of the national government and income from the BSP’s investments abroad during the month.
“These were partially offset, however, by the payments made by the national government for its foreign exchange obligations and foreign exchange operations of the BSP during the month in review,” the Bangko Sentral said.
The strong BoP surplus cut the cumulative BoP deficit in the first eight months to $2.44 billion from a high of $3.7 billion recorded as of July. However, it was still higher than the $1.39-billion BOP deficit registered in the first eight months of 2017.
“The higher cumulative BoP deficit for the period may be attributed partly to the widening merchandise trade deficit [based on the Philippine Statistics Authority’s preliminary data] for the first seven months of the year that was brought about by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion,” the Bangko Sentral said.
Data from the PSA showed that the country incurred a merchandise trade deficit of $22.49 billion in January to July, up from a shortfall of $13 billion a year ago.
Strong remittances from Filipinos working overseas helped offset this trade deficit. Data from the Bangko Sentral showed that cash remittances hit $16.6 billion in the seven-month period, up 3 percent from $16.1 billion a year earlier.
The Bangko Sentral said the BoP position was consistent with the gross international reserves level of $77.93 billion as of end-August.
“At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 7.1 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 6.4 times the country’s short-term external debt based on original maturity and 4.4 times based on residual maturity,” it said.
The negative BoP position this year pulled down the value of the peso by 8 percent this year. The local currency closed at 53.99 against the US dollar Wednesday.
BoP summarizes the country’s economic transactions with the rest of the world,. The Bangko Sentral earlier said it was expecting the balance of payments this year to post a wider deficit of $1.5 billion, compared to a deficiency of $863 million in 2017.