The country’s balance of payments posted a surplus of $2.43 billion in May, about 2.6 times higher than the $9280 million surplus recorded a year ago, the Bangko Sentral ng Pilipinas said Wednesday.
It said the surplus in May reflected mainly the inflows arising from the national government’s foreign currency deposits with the BSP and the BSP’s foreign exchange operations and income from investments abroad.
“These inflows were partially offset by the foreign currency withdrawals that the national government made to pay its foreign currency debt obligations during the month in review,” it said.
This brought total BOP surplus in the first five months to $4.03 billion, compared to the $5.19-billion surplus in the same period last year.
“The current BOP surplus was supported mainly by foreign borrowings by the government in April and May, coupled with lower merchandise trade deficit and by sustained net inflows of personal remittances from overseas Filipino workers,” the BSP said.
These inflows fully negated the impact of lower trade in services receipts, the net foreign portfolio investment outflows and lower foreign direct investments inflows, it said.
The BOP position also reflected record gross international reserves of $93.29 billion as of end-May 2020. “At this level, the reserves represent an external liquidity buffer which can cushion the domestic economy against external shocks,” the BSP said.
The BOP summarizes the country’s economic transactions with the rest of the world, with a surplus indicating that foreign exchange receipts exceed payments.
Persistent surpluses help build up the GIR, an ample supply of which supports the peso against the US dollar and keep domestic inflation at bay.
The BSP earlier downgraded the projection for full-year balance of payments position to $600 million (0.2 percent of GDP) from an earlier forecast of $2.9 billion surplus (0.7 percent of GDP).
The Monetary Board approved the revised projections during the June 11, 2020 meeting. The revision took into account new data and recent developments since the projection exercise in November 2019, particularly the impact of the coronavirus pandemic on the economy.
The current account deficit in 2020 is seen to be lower at $1.9 billion (-0.5 percent of GDP) from the previous forecast of $8.4 billion (-2.1 percent of GDP) primarily on account of the projected narrower trade-in-goods deficit.
Foreign exchange inflows from both overseas Filipino remittances and travel receipts are seen to decline by 5.0 percent and 56.9 percent, respectively, in 2020.
Meanwhile, the financial account is expected to post a lower net inflow of $1.2 billion compared to the previous forecast of $9.8 billion as both non-resident foreign direct investments and foreign portfolio investments are seen to register modest inflows of $4.1 billion and $2.4 billion, respectively.
The projected GIR level was revised upward to $90 billion (equivalent to 8.5 months import cover) from an earlier forecast of $86 billion (equivalent to 6.8 months import cover).
“While the external outlook remains clouded by uncertainty over the full extent of the COVID-19 impact, the BSP expects a gradual rebound in economic activity at home and overseas as public health measures in affected economies and government stimulus programs take effect in many countries,” the BSP said.
It said the economy continues to have adequate external buffers in place even prior to the pandemic outbreak. Authorities also continue to have ample policy space to implement measures to mitigate the effects of disruptions in economic activity,” it said.
The Philippines posted a BOP surplus of $7.8 billion in 2019.