THE country’s surplus in its dollar transactions fell short of the government’s projection for the year, despite ending 2021 on a positive note with a surplus.
The Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that the country’s Balance of Payments—the data summary of all the country’s transactions with the rest of the world—hit $1.345 billion at the end of 2021.
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 BOP surplus took into account the national government’s (NG) foreign-currency deposits of proceeds from its issuance of ROP (Republic of the Philippines) global bonds. The lower merchandise trade deficit due to the muted local and global economy during the period also contributed to the BOP surplus pile-up during the year.
The 2021 BOP surplus of the country is a normalization from the $16-billion BOP surplus seen in 2020. It is, however, short of the government’s $1.6-billion assumption for the year.
The country’s BOP ended 2021 in a surplus, albeit at a lower tone at $991 million for December. This is significantly lower than the $4.24 billion surplus seen in December 2020.
The BSP said the December data reflected the structural inflows for the year, such as the BSP’s income from its investments abroad, personal remittances, trade in services, foreign direct investments, and net foreign borrowings by the national government (NG).
However, these inflows were moderated by a wider trade in goods deficit.
The December BOP was a recovery from the $123-million deficit seen in November 2021.
Rizal Commercial Banking Corporation (RCBC) economist Michael Ricafort said the improvement in the latest BOP data could be attributed to the seasonal increase in structural inflows of the country, especially OFW remittances and conversion to pesos during the holiday season in December, as well as BPO revenues.
The economist said foreign direct investments (FDI) and proceeds of some foreign borrowings and the increase in various corporate fund-raising activities may have also helped push the December dollar inflows to the country.