The Philippine government’s $2-billion balance of payments (BOP) surplus projection for 2016 may have been under threat earlier this year due to monthly deficit prints caused by global volatility, but the central bank said it is back on track to achieve said projection, after latest data showed another surplus month in July this year.
BOP yielded another month of surplus for the fifth consecutive month this year, albeit at a lower volume.
The Bangko Sentral ng Pilipinas (BSP) reported on Friday a $215-million surplus in the country’s BOP for July this year.
The country’s BOP is an economic indicator that totals the exchange of transactions between the Philippines and the rest of the world. A surplus in the economy’s BOP means there were more dollar inflows during the period compared to the outflows.
While the July surplus is lower than the $354-million surplus seen in July 2014, it still contributed to the overall surplus of the country’s BOP for the first seven months of the year to hit $848 million.
This means the Philippines must be able to rake in about $1.15 billion more in surplus in the next five months, or about an average of $230 million in surplus monthly.
“If this momentum continues with the seven-month cumulative surplus of $848 million, we expect that the $2-billion forecast for the entire year of 2016 is doable,” central bank Deputy Governor for the Monetary Stability Sector Diwa Guinigundo said.
The central bank attributed the positive BOP outturn in July to the cash sent home by Filipino migrant workers and the receipts from outsourcing agencies.
“The BOP surplus for July is the third month of continued surplus position after four consecutive months of BOP shortfall, reflecting the very volatile global financial market that saw foreign capital moving out to safe haven territories,” Guinigundo said.
“But the resilient OFW [overseas Filipino workers] remittances and BPO [business-process outsourcing] revenues, supported by strong foreign direct and portfolio investments, represent the underlying dynamics of the BOP surplus for the month and for the first seven months of 2016,” he added.
The BSP senior official also said the surplus, albeit lower than the previous month’s, reflected the BSP’s favorable foreign-exchange operations and investments, as well as the dollar deposits by national government with the BSP, despite servicing of public debt.