By Lee C. Chipongian
The country’s balance of payments (BOP) continue to be in surplus in May and in the first five months was in excess of $5.19 billion, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.
This was a reversal of the $2.08 billion BOP deficit reported same time in 2018.
“The (cumulative) surplus may be attributed partly to remittance inflows from overseas Filipinos during the first four months of the year, and net inflows of foreign portfolio, foreign direct and other investments in the first quarter of 2019,” the BSP said. This is the fifth month of BOP surpluses.
For the month of May only, the BSP registered a $928 million surplus in contrast to the $583 million shortfall of the same month in 2018. This is the second largest monthly surpluses after January’s $2.7 billion.
The BSP noted that inflows in May came from the National Government’s (NG) net foreign currency deposits, and the BSP’s foreign exchange operations and income from its investments abroad. “These were offset partially, however, by the payments made by the NG for its foreign exchange obligations during the month in review,” the BSP said.
The central bank also reported that the final gross international reserves (GIR) was at $85.36 billion, which is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.
The BSP last week revised its BOP forecasts for 2019 to a surplus position of $3.7 billion from its previous November 2018 estimate of a $3.5 billion deficit. A $3.7 billion BOP surplus end-year reverses 2018’s $863 million BOP deficit.
BSP Deputy Governor Diwa C. Guinigundo said they expect both 2019 and 2020 to register BOP surpluses since, despite the shortfalls in the current account, the financial account could more than offset these deficits. He reiterated that the current account deficit is financeable through inflows from foreign direct investments, portfolio investments and even from loans.
Among the reasons for the BOP revised estimates were: downward revision in global growth outlook; near-term moderation in global trade outlook; and expected decline in commodities. The ongoing trade tensions between the US and China was also cited. The US Federal Reserve’s dovish monetary policy stance, uncertainties over Brexit and the expected modest rebound in non-resident capital flows to emerging markets were also factored in for the revised external account outlook for the next two years.