THE country’s transactions with the rest of the world yielded dollar earnings for the country in July this year, contrasting the two-month dollar deficit in May and June, data from the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed.
BSP Governor Benjamin Diokno told reporters that the country’s Balance of Payments (BOP) posted a surplus of $642 million in July this year, significantly higher than the $8-million surplus in the same month last year.
It is also a reversal of the BOP deficit of the country in the previous months. For the entire first seven months of 2021, the country’s BOP only hit a surplus in April and this July. All other months yielded dollar deficits for the country. The BOP is usually considered as an important economic indicator in an economy as it shows the level of earnings or expenses of the Philippines with its transactions with the world.
A surplus means that the country had more dollar earnings than its dollar expenditures during the period.
The BSP said the BOP surplus in July 2021 reflected mainly the national government’s (NG) net foreign currency deposits with the BSP and the BSP’s income from its investments abroad.
The surplus could have been larger, if not partly offset by the NG’s payments of its foreign currency debt obligations and the BSP’s net foreign exchange operations.
The BOP surplus in July reduced the cumulative BOP deficit in the first seven months of the year to $1.3 billion from a deficit of $1.94 billion in the first semester. The current year-to-date BOP level is a reversal from the $4.12-billion surplus recorded in the same period a year ago.
Earlier this year, the BSP said they expect the country’s BOP to hit a surplus of $7.1 billion by the end of 2021.
Despite optimism on the recovery of the country’s BOP, the BSP also earlier said the threat of resurgence of Covid-19 cases, the emergence of new variants of the virus and the risk of slower-than-expected vaccine deployment amid supply issues could “cast a shadow” on the projected BOP recovery path.
For 2022, the BSP projects overall BOP surplus to settle lower at $2.7 billion, driven mainly by the anticipated narrower current account surplus for the year.
Image courtesy of Nonie Reyes
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