The country’s balance of payments posted a surplus of $1.67 billion in April, on strong inflows of foreign borrowings during the month as the government raised funds for the coronavirus disease 2019 response.
Data from the Bangko Sentral ng Pilipinas showed that the BOP surplus in April was higher than $448-million surplus in March and $467-million surplus a year ago.
“The BOP surplus in April 2020 reflected mainly the inflows arising from the national government’s deposit with the BSP of its foreign loan proceeds as well as the BSP’s foreign exchange operations and income from its investments abroad,” the BSP said in a statement.
“These inflows were partially offset, however, by the foreign currency withdrawals made by the national government to pay its foreign currency debt obligations during the month in review,” it said.
The surplus in April brought the cumulative BOP position to a surplus of $1.6 billion in the first four months of the year, lower than the $4.27-billion surplus recorded a year ago.
“This development may be attributed partly to the reversal of foreign portfolio investments to net outflows in January to April from net inflows and lower net inflows of foreign direct investments in January-February compared to the previous year's level,” it said.
“The foreign portfolio investment outflows and lower foreign direct investments inflows were mitigated by the lower merchandise trade deficit and higher remittances from overseas Filipinos in January-March,” it said.
The BOP position reflects the record gross international reserves level of $90.94 billion as of end-April. At this level, the GIR represents 8 months’ worth of imports of goods and services and payments of primary income. It is also about 5.5 times the country’s short-term external debt based on original maturity and 4 times based on residual maturity.
BSP Governor Benjamin Diokno said Thursday the Monetary Board approved the staff’s recommendation for the revised BOP projections for 2020 and outlook for 2021.
“These include expectation of sharp contraction in both global and domestic economic activities in 2020, followed by a strong recovery in 2021; a shift toward increased monetary policy accommodations among central banks worldwide; and continued trade and political tensions, among others,” Diokno said.
“The overall BOP levels in 2020 and 2021 are projected to sustain the current surplus trend, though at levels lower than prior to the COVID-19 pandemic. BOP as percentage of GDP will fall from 0.7 percent [as of November 2019] to 0.2 percent [as of May 2020]; it will increase to 0.6 percent by 2021,” Diokno said.
He said the current account deficit as percentage of GDP was expected to decrease from -2.1 percent [as of November 2019] to -0.5 percent [May 2020]; it will inch up to -4.4 percent by 2021.
He said despite being resilient in past crises, remittances were seen to contract by 5 percent, a reversal from the 3-percent growth in the November 2019 projection. This is due mainly to large repatriation of workers and major economic disruptions in host countries. Remittances are expected to bounce back by 4 percent in 2021.
Meanwhile, the BSP said net inflows of foreign direct investments declined by 31.5 percent in February to $505 million from $737 million a year ago, pulled down by uncertainties associated with the spread of the coronavirus disease 2019 pandemic.
The decline in February was a reversal of the 12.1-percent increase in net FDI in January that rise to $657 million from $586 million a year ago.
This brought the net FDI inflows in the first two months to $1.162 billion, down 12.2 percent from the $1.324 billion in the same period last year.
“FDI declined as uncertainties on the impact of the COVID-19 outbreak dampened investor sentiment. In particular, net investments in debt instruments decreased by 26.4 percent to $317 million from $431 million,” the BSP said in a statement.