BOP turns around to surplus in March

The country’s balance of payments (BOP) reverted to a surplus of $495 million at the end of the first quarter 2022, an improvement compared to the $2.844 billion deficit same period last year.

The BOP for the first time this year had an excess of $754 million in March from the two shortfalls in January and February of $102 million and $157 million, respectively, based on data from the Bangko Sentral ng Pilipinas (BSP).

The BSP on Tuesday, April 19, also confirmed the final gross international reserves (GIR) tally of $107.31 billion as of end-March.

The $754 million March surplus is also a reversal of the $73 million BOP deficit in March 2021.

The BSP said the BOP surplus in March “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 cumulative BOP surplus of $495 million in the first quarter likewise reversed the $259 million deficit in the first two months of 2022. “Based on preliminary data, the cumulative BOP surplus reflected inflows such as from personal remittances, net foreign borrowings by the NG, and foreign direct and portfolio investments,” said the BSP.

The final GIR level of $107.31 billion as of end-March is lower by 0.5 percent compared to $107.8 billion in end-February. “Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 9.5 months’ worth of imports of goods and payments of services and primary income. Moreover, it is also about 7.1 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity,” according to the BSP.

Last year, the country’s BOP position yielded a lower surplus of $1.345 billion against $16.022 billion surplus in 2020.

For 2022, the BSP projects a BOP deficit of $4.3 billion in the wake of global uncertainties amid the Russia-Ukraine war and from the effect of higher import demand.

The GIR forecast remains at $108 billion for this year. The GIR will still be supported by foreign borrowings by the government and potential increase in the volume of gold purchases, said the BSP.

The latest BOP projections assume a much higher Dubai crude oil average than what was taken into consideration back in December 2021 when the last round of BOP estimates were discussed. The BOP deficit forecast for this year assumes a $102 per barrel on average crude oil which was higher than what BSP assumed last December of below $90 per barrel.

In revising BOP projections, BSP officials said two major forces that are shaping the economic landscape in 2022 are the government’s success in controlling Covid-19 cases and the Russia-Ukraine conflict and its impact on international markets such as commodity prices.

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