The country posted a balance of payments surplus of $1.35 billion in 2021, or 92 percent lower than the $16.02-billion surplus recorded in 2020, amid the widening trade deficit and the government’s settlement of foreign debt, latest data from the Bangko Sentral ng Pilipinas show.
It was also short of the $1.61-billion revised surplus target for 2021.
The BSP said the BOP in December posted a surplus of $991 million, a reversal of the $123-million deficit in November, but down significantly from the $4.24-billion surplus a year ago.
“In December 2021, the BOP surplus, which was lower than the $4.24-billion BOP surplus recorded in December 2020, reflected the structural inflows for the year, such as the BSP’s income from its investments abroad, personal remittances, trade in services, foreign direct investments, and net foreign borrowings by the national government. However, these inflows were moderated by a wider trade in goods deficit,” the BSP said.
The BOP position reflects an increase in the final gross international reserves level to $108.79 billion as of end-December from $107.72 billion in November.
The latest GIR level represents a more than adequate external liquidity buffer equivalent to 10.3 months’ worth of imports of goods and payments of services and primary income. It is also about 8.7 times the country’s short-term external debt based on original maturity and 5.8 times based on residual maturity.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the BOP figures in December could be attributed to the seasonal increase in structural inflows of the country especially OFW remittances and conversion to pesos during the holiday season.
Ricafort said other contributors for the surplus were “business process outsourcing revenues, foreign direct investments, proceeds of some foreign borrowings and the increase in various corporate fund-raising activities/investment banking transactions in the pipeline especially from December 2021-January 2022 as part of preparations for further re-opening of the economy.” Julito G. Rada
“However, offsetting factors to the latest BOP data include some foreign debt payments and the recent widening trend of the country’s trade deficit,” he said.
The Philippine Statistics Authority reported that the country incurred a record trade deficit of $4.71 billion in November, as the 36.8-percent growth in imports outpaced the 6.6-percent expansion in exports. The trade deficit in the first 11 months reached $37.9 billion, wider than the $22.14-billion gap a year ago.
Ricafort said any improvement in BOP and gross international reserves for the coming months could help provide greater cushion for the peso.