BSP reports $5.1-billion balance of payments surplus at end-2013
January 21, 2014 (updated)
The country’s balance of payments (BOP) position reported its 9th year surplus in 2013 at $5.085 billion, lower compared to 2012’s $9.236 billion.
The BOP surplus is also short of the Bangko Sentral ng Pilipinas’s (BSP) revised BOP projection of $5.3 billion for 2013 that BSP officials announced in December. The original forecast was $4.4 billion which was surpassed in November.
For December 2013, the BSP reported a monthly surplus of $419 million, lower than November’s excess of $837 million.
In an interview, BSP governor Amando M. Tetangco Jr. said BOP’s healthy position is anchored on the real current account surplus or from the real sector and this is more confidence inspiring than if it had come from capital sources.
The BSP started reporting a current account surplus in 2005. For this year, it forecasts current account surplus of $10.4 billion from an estimated $11.1 billion last year.
As for BOP, the Philippines reversed years of deficit in 2002 with a $810 million excess to BOP and it managed to sustain the surplus position until 2003 with $115 million but the trend was interrupted in 2004 with a $280 million. The increased inflows of funds and capital — mainly from remittances and exports — since 2005 has allowed the central bank to sustain a strong buffer of foreign exchange reserves for the last 10 years.
For 2014, the BSP forecasts BOP surplus of $3 billion since with an expanding economy, there will be more requirements for imports.
The strong current account balance and foreign exchange reserves continue to provide some buffer against the US Federal Reserve’s easing of its bond-buying program.
Tetangco said the continued BOP surplus bolsters the country’s external liquidity position. “what is nice about the surplus in the BOP is that it is emanating from the current account,” he added.
The Philippine’s strong current account balance has enabled the government to secure investment grade status from the three largest global credit rating agencies.
The current account is part of the BOP computation, along with the capital account and the financial account.
The current account includes the country’s transactions in goods, services, primary income and secondary income. As per BSP’s definition, it “measures the net transfer of real resources between the domestic economy and the rest of the world.” It is a surplus position when foreign exchange inflows far out weighs the outflows.