Fresh SDRs from IMF give Philippines a third dollar surplus this year

MANILA, Philippines — Additional allocations from the International Monetary Fund gave the Philippines its second-biggest dollar surplus this year in August.

What’s new

The Philippines’ balance of payments position recorded a $1.04 billion surplus in August, 58.9% bigger than the surplus posted in the same month last year, the Bangko Sentral ng Pilipinas reported Thursday.

The August figure was also higher than $642 million surplus chalked up in July, helping trim the eight-month BOP deficit to $253 million. So far this year, the Philippines recorded dollar surpluses in April, July and August.

Why it matters

The BOP is the summary of economic transactions of a country with the rest of the world during a specific period. A surplus occurs when more foreign funds enter the country against those that left while a deficit arises when the reverse happens.

Following the emergence of Delta variant, the central bank last week trimmed its BOP forecast for this year to a $4.1 billion surplus — narrower than the previous projection of a $7.1 billion surfeit.

What the BSP says

August’s dollar surplus was “due mainly to the additional allocation of Special Drawing Rights to the Philippines given the IMF’s efforts to increase global liquidity amid the pandemic,” the BSP said. 

The SDR serves as the unit of account of the IMF and other international organizations. The new SDRs totaled $650 billion for all IMF members, with the Philippines receiving $2.8 billion.

The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.

“These were partly offset, however, by the National Government’s (NG) foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures, and the BSP’s net foreign exchange operations,” the central bank added.

Other figures

  • The BOP surplus in August lifted the country’s gross international reserves to $107.96 billion, which could cover 10.8 months’ worth of the country’s imports of goods and payments of services and primary income.