Philippine payments position generates smaller surplus in second quarter – BSP

The Philippines’ balance of payments (BOP) position recorded a surplus in the second quarter of 2021, although declining year over year, due to a larger trade deficit recorded during the period. , the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

Data released by the BSP showed that the country’s balance of payments position posted a surplus of $ 905 million over the period from April to June, down 78.3 percent from the surplus of 4 , $ 2 billion over the same period in 2020.

The BOP is a record of all of the country’s transactions with the rest of the world during a given period. It is the difference between payments to and from a country.

A surplus means more funds have entered the country, while a deficit means more funds have gone out.

“This was due to the reversal of the current account to a deficit in the second quarter of 2021 from a surplus in the second quarter of 2020,” the central bank said.

The current account – the balance of a country’s imports and exports of goods and services – fell to a deficit of $ 1.2 billion from a surplus of $ 5.1 billion in the second quarter of the year last.

“In particular, the merchandise trade deficit has widened due to the sustained growth of imports, following the gradual resumption of domestic economic activities,” BSP said.

Meanwhile, the capital account, a record inflow and outflow of capital investment in the country, rose 49.8 percent to $ 20 million in the second quarter of the year, from $ 13 million. dollars year-on-year “due to lower net payments to non-residents.” produced non-financial assets (for example, patents, trademarks and copyrights).

The financial account or net loans of residents to the rest of the world posted net inflows of $ 2.9 billion, up 565.9% from $ 442 million a year earlier.

“The increase in net inflows is mainly explained by the downturn in the portfolio (due, in turn, to investments by non-residents in government bond issues) and other investment accounts at net inflows. and an increase in net direct investment inflows. says the BSP.

The balance of payments position since the start of the year stood at a deficit of $ 1.9 billion compared to a surplus of $ 4.1 billion in the same period last year, due to a larger merchandise trade deficit of $ 22.5 billion compared to $ 15.3 billion, as growth in imports outpaced growth in exports. during the period from January to June.

Nonetheless, the balance of payments positions at the end of June 2021 reflected higher gross international reserves of $ 105.8 billion compared to $ 93.5 billion at the end of June 2020.

The latter level of GIR represents a more than adequate cushion of external liquidity equivalent to 10.6 months of imports of goods and payments for services and primary income.

In addition, it is also about 7.5 times the country’s short-term external debt on the basis of original maturity and 5.1 times on the basis of residual maturity.

Short-term debt based on residual maturity refers to the stock of external debt with an original maturity of less than or equal to one year, plus principal repayments on medium and long-term public and private sector loans from the public and private sectors. expiring within the next 12 months.

“The year-over-year increase in reserves largely reflects the inflows of the National Government’s (NG) net foreign currency deposits with the BSP as well as the net foreign exchange transactions and the BSP’s income from its investments abroad, ”the central bank said. .

“In addition, the upward adjustment in the value of gold holdings of BSP due to the increase in the price of gold in the international market has also contributed to the increase in the level of GIR”, a- he declared.—AOL, GMA News

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