November 25, 2017 | MANILA, PHILIPPINES

April surplus narrows year-to-date BoP gap

THE country’s external payments position recovered in April to post the widest surplus in over two years on the back of a recovery in exports and strong remittance inflows, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

The Philippines’ balance of payments (BoP) swung to a $917-million surplus for the month, turning around from a $550-million deficit posted in March and rising from a $184-million surfeit in April 2016.

The BoP measures the country’s transactions with the rest of the world during a specific period. A surplus shows that more funds entered an economy against what went out, while a deficit meant more money fled.

April’s BoP position is also the biggest surplus since $985 million in February 2015.

The latest figure ended six straight months of a BoP deficit, which analysts previously attributed to a wider current account deficit as imports sustained a double-digit growth to keep up with the growing local economy, with a boost from the government’s aggressive spending push on infrastructure.

The April tally trimmed the year-to-date BoP shortfall to a $78-million deficit, coming from a $994-million gap as of end-March, according to latest central bank data. The gap is slightly wider than the $25 million deficit posted during the comparable period in 2016.

Sought for comment, BSP Deputy Governor Diwa C. Guinigundo said the recovery in exports and the steady stream of structural inflows boosted the country’s external payments position.

“It is very encouraging that the April BOP position reversed to a surplus position and mitigated the cumulative BOP shortfall for the first four months of 2017,” Mr. Guinigundo said in a text message to reporters.

April saw the peso return to the P49 level versus the dollar, after several weeks of trading above P50 at a time of heightened global uncertainty that lingered till a fresh rate hike in the United States last March.

Foreign portfolio investments posted a $51.49-million net inflow last month, reversing $459.86-million outflows posted in March, according to BSP data.

Merchandise exports grew by 18.3% as of end-March, reversing an 8.4% contraction a year ago. Meanwhile, cash remittances sent home by overseas Filipino workers also posted an all-time high of $2.615 billion in March to bring the latest tally to $6.953 billion, 7.7% up from the comparable year-ago period.

Sustained revenues from the business process outsourcing industry, coupled with additional flows from foreign investments and tourism receipts, likewise supported the country’s BoP position, Mr. Guinigundo said.

In turn, the central bank also shored up large dollar inflows from currency trading and its offshore investments, even as the government’s debt payments somewhat offset the inflows.

However, Mr. Guinigundo said it was “too early” to tell if the surplus can be sustained for the rest of the year.

As of December, the central bank expects the country’s BoP position to log a $1-billion surplus this year, representing 0.3% of gross domestic product. However, the BSP is due to announce a new set of forecasts this month.