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September 27, 2022

Philippine external payments position strengthens with BOP surplus in March

The external payments position of the Philippines strengthened in the first quarter of the year with a balance of payments (BOP) surplus in March, as more US dollars flowed into the country arising from the fresh foreign borrowings by the national government.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the country’s BOP yielded a $495 million surplus from January to March this year, reversing the $2.84 billion deficit recorded in the same quarter last year

“Based on preliminary data, the cumulative BOP surplus reflected inflows such as from personal remittances, net foreign borrowings by the national government, and foreign direct and portfolio investments,” the central bank said in a statement.

The BOP is the difference in total values between payments into and out of the country over a period.

For the month of March alone, the country’s booked a BOP surplus of $754 million versus the $73 million shortfall recorded in the same month last year as well as the $157 million deficit booked in February.

According to the BSP, last month’s surplus reflected inflows arising mainly from the national government’s net foreign currency deposits with the BSP and central bank’s income from its investments abroad.

The national government borrowed $2.25 billion via its first foreign commercial borrowing for 2022. The first foray into the offshore debt market amid the volatile markets included the maiden $1 billion green bond issuance.

The gross international reserves (GIR) level declined slightly by 0.5 percent to $107.31 billion as of end-March from $107.8 billion as of end-February.

The latest buffer represents a more than adequate external liquidity buffer equivalent to 9.5 months’ worth of imports of goods and payments of services and primary income.1 Moreover, it is also about 7.1 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity.

For 2022, the central bank sees a BOP deficit of $4.3 billion instead of a smaller surplus of $700 million as well as a smaller GIR level of $108 billion instead of a record high of $112 billion.

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