March BoP surplus biggest in 3 months

By Luz Wendy T. Noble, Reporter

THE Philippines’ balance of payments (BoP) position swung to a surplus in March, driven by foreign currency deposits from the National Government and the central bank’s investments abroad.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed that BoP recorded a $754-million surplus last month. This is a turnaround from the $73-million gap a year earlier, as well as the $157-million deficit in February.

This is also the biggest BoP surplus since the $991-million surfeit in December.

“The BoP surplus in March 2022 reflected inflows arising mainly from the National Government’s (NG) net foreign currency deposits with the BSP and BSP’s income from its investments abroad,” the central bank said in a statement.

Last month’s BoP surplus could be partly attributed to the global bond issuance by the government, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Bureau of the Treasury raised $2.25 billion through its maiden triple tranche dollar-denominated bond offering in March.

The government will use the proceeds for the national budget and the sustainable finance program.

At its end-March level, the BoP reflects a final gross international reserve of $107.31 billion, down 0.5% from the $107.8 billion a month earlier.

This is enough to cover 7.1 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity. It also represents buffers equivalent to 9.5 months’ worth of imports of goods and payments of services and primary income.

The BoP position posted a $495-million surplus in the first quarter of 2022, a reversal from the $2.844-billion deficit in the same period last year.

The BoP gives a glimpse into the country’s transactions with the rest of the world. A deficit means more funds left the country, while a surplus shows that more money came in.

The ongoing war between Russia and Ukraine could complicate global and domestic recovery and affect the country’s BoP this year, Security Bank Corp. Chief Economist Robert Dan J. Roces said.

“War-induced volatility in the global financial and commodity markets has the potential to spill over to the local economy, and so this points to a negative impact to our major trading partners and leading to a [BoP] deficit for 2022,” Mr. Roces said in a Viber message.

The Philippines is a net oil exporter, making it vulnerable to the surge in fuel prices caused by the war.

For this year, the BSP expects the BoP position to post a $4.3-billion deficit, which is equivalent to 1% of the gross domestic product.