By Katherine K. Chan
THE PHILIPPINES’ balance of payments (BoP) surplus sharply narrowed 12 months on 12 months in September, the central bank reported on Monday.
The country’s BoP position was at a $82-million surplus in September, shrinking from the $3.526-billion surfeit in the identical month a 12 months ago, preliminary Bangko Sentral ng Pilipinas (BSP) data showed.
This was also narrower than the $359-million surplus seen in August and marked the second straight month that the Philippine external position yielded a surfeit.
“The BoP surplus reflected the Bangko Sentral ng Pilipinas’ net income from its investments abroad and National Government’s (NG) net foreign currency deposits with the BSP,” the central bank said in a press release.
BoP refers back to the country’s economic transactions with other nations. A surplus indicates more funds entered the country, while a deficit shows that the country spent greater than it received.
Last month’s surplus helped narrow the country’s end-September BoP deficit to $5.315 billion. Nevertheless, this was a reversal from the $5.117-billion surplus posted in the identical period last 12 months.
“Preliminary data indicate that the year-to-date BoP deficit was largely as a result of the continued trade in goods deficit,” the BSP said.
“This was partly offset by the sustained net inflows from personal remittances from overseas Filipinos, trade in services, foreign direct and portfolio investments, and foreign borrowings by the NG.”
The country’s trade gap, or the difference between its exports and imports, was at $32.38 billion in the primary eight months of the 12 months, the most recent data from the Philippine Statistics Authority showed. This was narrower than the $34.33-billion deficit within the comparable year-ago period.
The Philippines’ trade-in-goods balance has been in deficit for over a decade or because the $64.95-million surplus recorded in May 2015.
“September’s BoP surplus was likely bolstered by net receipts in services trade, overseas Filipino remittance inflows, and net foreign equity investments that, combined, overshadowed trade-in-goods deficit and net foreign bond outflows. This led the third-quarter BoP to be in a surplus position,” Angelo B. Taningco, research head and chief economist at Security Bank Corp., said in an e-mail.
BSP data showed that the country recorded a $274-million surplus within the July-September period. This was smaller than the $3.676-billion surfeit in the identical quarter last 12 months.
Mr. Taningco said they expect one other surplus this quarter, which might help trim the end-2025 BoP deficit to $4.5 billion.
The BSP expects the general BoP position to finish at a $6.9-billion deficit this 12 months or -1.4% of gross domestic product.
“The smaller BoP surplus reflects fewer one-off inflows and a still-wide trade gap, however the external position stays manageable with regular remittances, strong services exports, and solid reserves,” Robert Dan J. Roces, economist at SM Investments Corp., said in a Viber message.
“As global rates ease and regional demand recovers, investment inflows may return and support liquidity and credit conditions, which should help firms with deep local roots and diverse sources of growth.”
RESERVES
The BSP said the country’s BoP position mirrored the rise in its gross international reserves (GIR) to $109.1 billion at end-September from $107.1 billion as of August.
“The extent of GIR stays an adequate external liquidity buffer, corresponding to 7.3 months’ value of imports of products and payments of services and first income,” it said. That is well above the three-month standard.
“Furthermore, it covers about 3.8 times the country’s short-term external debt based on residual maturity.”
This ensures that the country has ample foreign exchange to satisfy its financing needs, corresponding to import and debt payments, the central bank said.
The country’s gross reserves are made up of foreign-denominated securities, foreign exchange, and other assets corresponding to gold. Except for financing its external obligations, these are utilized by the central bank to assist stabilize the peso and likewise function a buffer against global economic disruptions.
The BSP expects dollar reserves to settle at $105 billion by end-2025.