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The Philippines reported a balance of payments (BOP) surplus for the seventh consecutive month in August, mainly due to external borrowing from the government for its response to the pandemic.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that the surplus of $ 657 million recorded in August was 33% higher than the surplus of $ 493 million recorded a year ago, and significantly higher than the surplus of $ 8 million in July. . This is also the highest surplus since May’s $ 2.431 billion.
“The balance of payments surplus in August mainly reflected the inflows of the BSP’s foreign exchange operations and the income from its investments abroad,” the central bank said.
The balance of payments shows the economic transactions of the country with the rest of the world within a given period.
So far this year, the balance of payments registered a surplus of $ 4.774 billion, 13.6% less than the surplus of $ 5.529 billion in the period from January to August 2019.
“The current surplus of the balance of payments was mainly supported by external loans from the National Government together with a lower net deficit in merchandise trade.1 These results fully offset 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.
Government loans from January to July reached P1,857 billion, increasing 121% from the P839.7 observed in the same period of 2019, data from the Treasury Office showed. In July alone, loans reached P135 billion, of which P67.7 billion came from external lenders.
By the end of 2020, the BSP expects the balance of payments position to have a surplus of $ 600 million, which is equivalent to 0.2% of the country’s gross domestic product.
The last position of the balance of payments also reflects a final record of gross international reserves of $ 98.95 billion at the end of August, 15% more than the $ 86.031 billion a year ago and 0.35% of the $ 98.6 billion at the end of July.
“This is equivalent to 9.8 months of imports of goods and payments for services and primary income. In addition, it is also approximately 9 times the country’s short-term foreign debt based on original maturity and 5.4 times based on residual maturity, ”said the BSP.
The sustained slowdown in imports will likely contribute to a possible surplus in the BOP in the coming months, said Rizal Commercial Banking Corp. chief economist Michael L. Ricafort.
In July, the trade deficit stood at $ 1.827 billion, less than the gap of $ 3.641 billion in the same month last year, data from the Statistics Authority of the Philippines showed. In the first seven months of the year, the trade balance remained at a deficit of $ 12.501 billion, thinner than the trade gap of $ 24.066 billion in the comparable seven months of 2019.
The import bill decreased 28.1% year-on-year to $ 46.636 billion in the period from January to July 2020.
“The sustained recovery of OFW remittances, exports and revenues from business process outsourcing would also help maintain balance of payments surpluses in the coming months,” added Ricafort.
Cash remittances have recovered since June after the March to May slide due to the pandemic crisis. In July, cash remittances increased 7.8% to $ 2.783 billion from $ 2.581 billion. However, year-to-date inflows are still down 2.4% to $ 16.802 billion from $ 17.219 billion.
“Over the next few months until the end of the year, I expect more of the same for the BOP until the veil on the pandemic is finally lifted,” UnionBank Philippines chief economist Rubén Carlo O. Asunción said in a text message. . – Luz Wendy T. Noble
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