PH Posted $2.26-B BOP Surplus In H1

The country’s balance of payments (BOP) surplus decreased to $2.26 billion as of end-June from the previous month’s $2.87 billion due to government payments of past foreign currency loans.

Photo Insert: For the month of June, the BOP however continued to be in shortfall at a $606 million deficit, higher than May’s $439 million deficit due to payments of maturing loans and other government expenses.

The latest cumulative BOP surplus is, however, a reversal of the $3.1 billion deficit same period in 2022, based on Bangko Sentral ng Pilipinas (BSP) data. Meanwhile, the BSP said the final gross international reserves (GIR) are lower at $99.4 billion as of end-June from $100.6 billion in end-May.

The BSP reports the GIR twice a month, first as preliminary numbers and as a final tally by the time the BOP is released.

Last July 10, the announced preliminary GIR was $99.8 billion. The GIR is also lower compared to the same period last year of $100.85 billion.

The BOP, which is a summary of the economic transactions of a country with the rest of the world for a specific period, is in surplus due to inflows from the country's foreign exchange sources such as remittances, trade exports, and foreign direct investments (FDIs).

For the month of June, the BOP however continued to be in shortfall at a $606 million deficit, higher than May’s $439 million deficit due to payments of maturing loans and other government expenses. Compared to June 2022 $1.57 billion deficit, this year’s turnout is an improvement.

“The BOP deficit in June 2023 reflected outflows arising mainly from the National Government’s (NG) net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” said the BSP.

As for the January to June BOP surplus, the central bank said the numbers reflected inflows coming from remittances, the government’s net foreign borrowings, trade-in services, and FDIs. Overseas Filipinos’ cash remittances as of end-May amounted to $12.98 billion while FDIs were at $2.92 billion.

Last June 16, the BSP’s Monetary Board cut the deficit projection to $1.2 billion for 2023 versus its previous announcement of $1.6 billion in March.

For 2024, the central bank expects BOP will have a lower deficit of $500 million. The BSP said the emerging BOP forecasts for 2023 and 2024 “reflect mainly the slightly weaker global growth prospects for this year and the next”.

For this year, the overall BOP position is expected to be in shortfall due to a narrower merchandise trade gap, as goods imports growth is expected to slow down sharply following the pullback in international prices of major commodities, particularly fuel, said the BSP.

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