The Philippines reversed its balance of payments (BOP) deficit in June and posted a surplus in July, with government foreign exchange deposit rising, the central bank generating higher income from foreign investments and positively managing its foreign exchange operations.
The payments position in July showed a $501 million surplus, compared with a $24 million deficit posted in June, latest figures from the Bangko Sentral ng Pilipinas (BSP) showed on Tuesday.
Year-on-year, the BOP surplus for July stood at only half of the year-earlier $1.099 billion.
July’s surplus eased the year-to-date deficit.
The central bank explained that July’s surplus came mainly from the current account component.
“Of course, the current account is expected. We don’t have the latest data yet, we only have up to March, but it is expected to continue to be in surplus,” BSP Governor Amando Tetangco Jr. said.
Other sources of payments surplus are foreign exchange deposits from the government, positive management of the central bank’s foreign exchange operations and BSP’s income from foreign investments, Tetangco said.
Cumulative BOP gap eases
The country’s cumulative BOP position remained in negative territory but given the surplus in July, the seven-month deficit narrowed to $3.64 billion from the six-month gap of $4.14 billion as of June.
Compared with the year earlier, the seven-month deficit also eased from $3.68 billion.
The balance of payments summarizes the country’s economic transactions with the rest of the world over a certain period. It consists of the current account, the capital account, and the financial account.
For this year, the BSP is targeting a payments surplus of $1.1 billion, equivalent to 0.3 percent of the country’s gross domestic product. In 2013, the cumulative BOP stood at a surplus of $5.09 billion.