The country’s balance of payments position swung to a surplus of $854 million in March from a deficit of $244 million a year ago due mainly to net inflows of hot money and remittances, data from Bangko Sentral ng Pilipinas show Tuesday.
Data showed the March surplus was the highest in 13 months, or since the $985-million surplus in February 2015. It was also a sharp turnaround from the $316-million deficit in February this year.
The March figure trimmed the balance of payments deficit in the first three months to $275 million from $1.129 billion in February.
“Capital flows-wise, we continue to see foreign direct investments and portfolio investments remaining generally resilient,” Bangko Sentral Deputy Governor Diwa Guinigundo said in a text message.
Foreign portfolio investments or “hot money” in March posted a net inflow of $482 million, the highest in 12 months, due mainly to the renewed investors’ confidence on the country’s macro-economic fundamentals.
The BoP in January registered a deficit of $813 million due to some outflows given the negative market sentiment following the expected US Fed tightening and China’s economic slowdown.
Bangko Sentral Deputy Governor Diwa Guinigundo earlier said the BoP deficit would not persist through the rest of the year. He said the BOP, instead, would show a surplus of around $2 billion because of sustained current account surplus on remittances from migrant Filipino workers and business process outsourcing revenues.
Money sent home by Filipino workers in February rose 9.1 percent to reach $2.11 billion from $1.935 billion a year ago, the fastest in eight months, due mainly to the sustained demand for local skilled workers abroad.
Bangko Sentral earlier projected remittances to grow around 4 percent this year, the same pace of expansion in 2015.
Guinigundo said monetary authorities were closely monitoring external developments because of their impact to the country’s external trade. These are the tightening moves of the US Federal Reserve, the growth trajectory of the Chinese economy and oil prices in international markets.
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 vice versa.
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.
Thre BoP in 2015 swung to a surplus of $2.616 billion, surpassing the target of $2 billion. It was also a reversal of the $2.858-billion deficit in 2014.
The balance of payments position in 2016 is expected to improve to 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 reserves to $82.7 billion from $80.61 billion in 2015.