The Philippines’ balance of payments (BOP) recovered after months of deficit as it posted a $373 million surplus in May, trimming the payments balance deficit for the first five months of the year.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed that the May BOP position was a reversal of the $19 million deficit in April.
The current figure is also higher compared to the payments balance surplus of $75 million a year earlier.
The cumulative BOP position for the first five months of the year remained in negative territory at -$4.12 billion, which was an improvement from the -$4.49 billion cumulative position at the end of April.
The year-to-date BOP total, however, is a sharp reversal from the $1.88 billion payments surplus recorded in the same period a year earlier.
In a text message to reporters, BSP Governor Amando Tetangco Jr. said that the May BOP surplus can be attributed to the central bank’s foreign exchange operations, foreign exchange deposits from the national government and BSP’s foreign exchange investment income.
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.
A surplus arises when foreign exchange inflows are greater than outflows, while a deficit is incurred when outflows exceed the inflows, causing a drop in the country’s gross international reserves.
For this year, the BSP is targeting a payments surplus of $3 billion, equivalent to 0.9 percent of the country’s gross domestic product. In 2013, the cumulative BOP stood at a surplus of $5.09 billion.
The central bank has said, however, that the BOP projections for the remainder of 2014 are being reviewed and finalized based on actual developments in both the domestic and external economic environment during the first five months of the year.