PH payments position back to surplus in July

The Philippine balance of payments (BOP) position swung back to a surplus in July after the deficit in the previous month due mainly to inflows from the overseas investments of the Bangko Sentral ng Pilipinas (BSP), data released on Monday showed.

The BOP position stood at a $62-million surplus in July, reversing the $155-million deficit in June, and the $53-million surplus the same month last year.

The payments position takes into account Philippine transactions with the rest of the world during a specific period. A surplus means more funds entered the country, while a deficit means more funds exited.

“The BOP surplus in July 2024 reflected inflows mainly from the net income from the BSP’ investments abroad and the national government’s net foreign currency deposits with the BSP,” it said in an accompanying statement.

The latest figures brought the year-to-date BOP level to a $1.504-billion surplus, lower than the $2.207-billion surplus recorded the same month last year.

“Based on preliminary data, this cumulative BOP surplus reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, net foreign direct investment (FDIs), trade in services, net foreign borrowings by the national government, and net foreign portfolio investments,” the BSP said.

Latest data available from the Philippine Statistics Authority (PSA) shows that the balance of trade in goods posted a $4.303-billion deficit in June, lower than the $4.707-billion deficit in May, but wider than the $3.936 billion in June 2023.

Meanwhile, cash remittances or money transfers through banks or formal channels rose by 2.5% to $2.88 billion in June from $2.81 billion the previous year. Personal remittances or the sum of transfers sent in cash or in-kind via informal channels grew 2.5% to $3.21 billion from $3.13 billion.

The latest GIR is equivalent to 7.9 months’ worth of imports of goods and payments of services and primary income. It is also about 6.1 times the country’s short-term external debt based on original maturity, and 3.8 times based on residual maturity.

Moving forward, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the BOP data could improve and boost GIR data due to proceeds of the national government’s foreign currency-denominated debt, continued growth in remittances and FDIs, and the narrowing trend of the trade deficit.

“For the coming months, BOP data could still improve with the continued increase/growth in the country’s structural inflows as the economy reopens/recovers further towards greater normalcy,” he said in a separate commentary. — RSJ, GMA Integrated News