FOREIGN borrowings by the national government and higher remittance inflows were among the drivers of the country’s Balance of Payments surplus in October, according to the Bangko Sentral ng Pilipinas (BSP).
The BSP said the country’s overall balance of payments (BOP) position posted a surplus of $1.5 billion in October 2023, higher than the $711- million BOP surplus recorded in the same month last year.
This is the highest since the $3.081-billion surplus recorded in January 2023. This makes the October surplus the second highest for the year and one of only three months when the country recorded a surplus this year.
“Largely brought about by the proceeds of the national government’s retail dollar bonds [RDBs] worth $1.26 billion during the month; so higher national government foreign debt partly led to the latest increase in the BOP and in the gross international reserves or GIR; as well as some investment income from abroad,” Rizal Commercial Banking Corporation Chief Economist Michael L.
BSP said the BOP surplus in October brought the current year-to-date BOP level to a $3.246-billion surplus, a reversal from the $7.1 billion deficit recorded in the same period a year ago.
This is the highest since the year-to-date BOP surplus of $3.305 billion recorded in the January to April period.
The data from the central bank showed that in the latest data from the Philippine Statistics Authority (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-September 2023 reached $39.8 billion, down from the $46.7 billion deficit posted in the same period last year.
“This development reflected mainly the improvement in the balance of trade alongside the higher net inflows from personal remittances, trade in services, and foreign borrowings by the NG. Further, net inflows from foreign direct investments contributed to the surplus, albeit lower during the period,” BSP said in a statement.
With this, BSP said the country’s gross international reserves (GIR) level increased to $101 billion as of end-October 2023 from $98.1 billion as of end-September 2023.
The latest GIR level represents a more-than-adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.
Moreover, it is also about 5.8 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.
Ricafort said the latest GIR at $101 billion as of end-October 2023 is equivalent to 7.5 months of imports, or still more than double the acceptable minimum international standard of 3-4 months.
He added that this is also equivalent to about 5.8 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.
“Going forward, any improvement in BOP data and in GIR data for the coming months could help provide greater cushion/support/buffer for the peso exchange rate vs. the US dollar especially vs. any speculative attacks,” he also said.
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