Philippines: BOP surplus hits $3.1 billion in January

As government borrows more

MANILA, Philippines — The Philippines posted a two-year high balance of payments (BOP) surplus of $3.08 billion in January, reversing the $102 million deficit incurred a year ago, as the Marcos administration forayed into the offshore debt market early this year.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed the latest figure was the highest since the $4.24 billion surplus recorded in December 2020.

“The BOP surplus in January 2023 reflected inflows arising mainly from the national government’s net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds, and net income from the BSP’s investments abroad,” the BSP said.

In January, the new administration tapped the international debt market for the second time since President Marcos assumed office in June last year.

The Philippines issued $3 billion worth of global bonds payable in 5.5, 10.5 and 25 years despite rising interest rates amid the aggressive rate hikes delivered by global central banks led by the US Federal Reserve to tame inflation.

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

A surplus means that more dollars flowed into the country from exports, remittances from overseas Filipino workers (OFWs), business process outsourcing (BPO) earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

The Philippines booked an all-time high $7.26-billion BOP deficit last year, reversing the $1.35 billion surplus in 2021, as the elevated global commodity prices brought about by geopolitical tensions further widened the gap between imports and exports.

The shortfall, however, was lower than the revised $11.2 billion shortfall or 2.8 percent of gross domestic product (GDP) projected by the central bank for 2022.

For 2023, the BSP is looking at a smaller BOP deficit of $5.4 billion or 1.3 percent of GDP.

The BSP also revised the country’s gross international reserves (GIR) level to $100.7 billion in January from $96.1 billion in December.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income. Moreover, it is also about 6.2 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity,” the BSP said.

Source: https://www.philstar.com/business/2023/02/21/2246383/bop-surplus-hits-31-billion-january