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The Philippines saw more dollars in than out of the local economy in July, but barely, as the government’s foreign loan proceeds were offset by repayments to foreign borrowers, according to the central bank.
In a statement, Bangko Sentral ng Pilipinas (BSP) said that the country’s overall balance of payments (BOP) position registered a surplus of $ 8 million in July 2020, lower than the flow surplus of $ 248 million recorded in the same month last year. .
“The surplus mainly reflected the inflows of the national government’s external loan resources that were deposited in the BSP, as well as the BSP’s income from its investments abroad,” said the central bank.
However, these inflows were offset by withdrawals of foreign currency made by the national government to pay its debt obligations in foreign currency during the month analyzed.
The balance of payments represents the net amount of foreign currency that enters or leaves the local economy, considering everything the Philippines earns from the goods and services it sells to the rest of the world against everything it pays from abroad. This count also takes into account the funds that enter or leave the country’s financial markets for investment purposes.
A surplus means that the country earns more than it spends, while a deficit means the opposite, with corresponding effects on the value of the currency.
For the fourth consecutive month, the accumulated position of the balance of payments registered a surplus, registering $ 4,120 million at the end of seven months. This accumulated surplus was less than the surplus of $ 5,040 million registered in the same period a year ago.
The current surplus was supported mainly by external borrowing from the national government, most of which was used between April and July, and the lower merchandise trade deficit.
“These positive results completely canceled out the impact of higher net outflows of foreign portfolio investment and lower net inflows of foreign direct investment, trade in services and personal remittances,” said the central bank.
The last position of the balance of payments reflected a record level of final gross international reserves of $ 98.6 billion at the end of July 2020.
At this level, the country’s total dollar reserves represent a “broad” external liquidity buffer, which can cushion the national economy against external shocks, the central bank explained.
This is equivalent to 8.9 months of imports of goods and payments for services and primary income. In addition, it is also approximately 7.6 times the country’s short-term foreign debt based on original maturity and 4.9 times based on residual maturity.
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