The country’s balance of payments (BOP) recovered in September as it posted a surplus of $465 million, data from the Bangko Sentral ng Pilipinas (BSP) showed on Friday.
The BOP surplus was a reversal of the $318-million deficit recorded in August. However, the BOP surplus in September was lower compared to $751-million level recorded in the same month last year.
BSP Deputy Governor Diwa Guinigundo said that the BOP position for September can be attributed to the continued inflow of foreign exchange from different sources, particularly foreign portfolio and direct investments.
“Data for exports, remittances and BPO [business process outsourcing]receipts are still not available although initial indicators show their continued strength,” he said.
He added that these inflows were supported by BSP investment income from abroad and national government deposits of foreign exchange with the central bank.
The BOP summarizes the country’s economic transactions with the rest of the world during a period. It consists of the current account, the capital account, and the financial account. A surplus arises when inflows are greater than outflows, while a deficit is incurred when outflows of dollars exceed the inflows.
Meanwhile, the BSP data said that cumulative surplus from January to September this year amounted to about $3.83 billion, lower than the $5.83-billion surplus recorded in the first nine months of 2012. BOP ended at $9.2-billion surplus last year.
The BSP said that the country is still on track of meeting the projected $4.4-billion BOP surplus this year.
A deficit in the BOP causes a drop in the country’s gross international reserves (GIR). The GIR are foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances, and for managing the magnitude of such imbalances.
GIR consists of holdings of gold, special drawing rights, foreign investments and foreign exchange, including Reserve Position in the Fund. These assets are valued mark-to-market. Higher GIR helps prop up the peso and keeps domestic inflation at bay.
As of end-September, the country’s GIR level stood at $83 billion, while inflation for the same month picked up to 2.7 percent, below the 3-percent to 5-percent target range of the BSP for 2013.