THE country’s balance of payments (BOP) position improved and posted a surplus for the first time in nine months, according to the Bangko Sentral ng Pilipinas (BSP).
The country posted a BOP surplus of $3.1 billion in January 2023, a reversal from the $102-million BOP deficit recorded in the same month last year.
The surplus in January was the highest surplus recorded by the country in more than two years or since December 2020.
“The BOP surplus in January 2023 reflected inflows arising mainly from the National Government’s [NG] net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds, and net income from the BSP’s investments abroad,” the BSP said.
Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort said this was also helped by the improvement in the government’s net income from investments abroad.
This was due to the gains in the US/global financial markets during the month amid the China economic reopening narrative since December 2022.
He added that another factor was the recent narrowing of the trade deficit/net imports to the narrowest in nearly a year recently.
“The prices of imported oil and other imported commodities also corrected low in recent months amid risk of US recession after aggressive Fed rate hikes earlier in 2022,” Ricafort said.
GIR back at $100B
Meanwhile, this improvement in the BOP position led to an increase in the country’s Gross International Reserves (GIR) and led it back to the $100-billion level at the end of January.
The GIR reached $100.7 billion as of end-January 2023 from $96.1 billion as of the end of December 2022.
The latest GIR level, BSP said, represented a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income.
BSP explained this ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.
It was also about 6.2 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
The BSP said short-term debt is based on residual maturity and refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
Image credits: Patrick Roque via Wikimedia Commons CC BY-SA 4.0
