BoP surplus hits 2-mo high in Oct
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Tue, 19 Nov 2019 16:41:53 +0000
THE Philippines’ balance of payments (BoP) surplus grew to a two-month high of $163 million in October, keeping the year-to-date tally above the central bank’s target for the year.
The Bangko Sentral ng Pilipinas (BSP) reported on Tuesday that the amount was higher than the $38-million surplus in September and reversed the $458-million deficit recorded a year ago.
It was also the largest since August, when the payments position stood at a surplus of $493 million, and boosted the January-to-October tally to a $5.73-billion surplus, a turnaround from the $5.59-billion shortfall posted a year earlier.
The 10-month tally already surpassed the BSP’s upwardly revised forecast of a $3.7-billion surplus for this year.
“Inflows in October 2019 reflected the increase in the national government’s net foreign currency deposits and [the] BSP’s income from its investments abroad,” the central bank said in a statement.
These were partially offset by payments made by the national government for its foreign exchange obligations.
The January-to-October surplus “may be attributed partly to personal remittance inflows from overseas Filipinos and net inflows of foreign direct investments (FDI),” the Bangko Sentral said.
Personal remittances reached $24.64 billion in January to September, up 3.9 percent from the $23.71 billion posted a year earlier.
Net FDI hit $4.53 billion in the first eight months, 39.7 percent down from the amount in January to August 2018.
In a comment, ING Bank senior economist Nicholas Antonio Mapa sees a reversal of the country’s payments balance to deficit next year.
“As we round out the year… we… expect a slight change in the tides, with the Fed expected to be neutral next year and with the government gearing up for a double-headed fiscal stimulus,” Mapa said, referring to the Federal Reserve.
“These developments could lead to a renewed widening of the trade deficit (as imports bloat) to exert pressure on the BoP, while financial flows may enjoy the same velocity in 2020, with [the] BSP expected to cut policy rates to support the growth objective,” he added.
The BoP ended at a deficit of $2.306 billion last year, wider than the $863 million recorded in 2017, but lower than the BSP’s $5.5-billion forecast.