MANILA, Philippines – The Philippines’ balance of payments (BOP) – transactions with the rest of the world for a period – swung to a deficit in May, decreasing slightly its year-to-date surplus.
The Bangko Sentral ng Pilipinas (BSP) reported on Friday, June 19, that BOP posted a $58-million deficit last month. This is a turnaround from the $373-million surplus recorded last year and the $380-million surplus seen in April.
A deficit in BOP means that more funds left the country than went in. This in turn reduces the money supply that the Philippines can use as a cushion against external volatility.
The BOP last month brought the January-May 2015 tally to a $1.199-billion surplus, turning around from the $4.12-billion deficit recorded in the same period last year. But it is slightly smaller than the $1.257-billion surplus at end-April.
To recall, the Philippines’ BOP stood at a deficit of $2.879 billion last year – the biggest since the shortfall in 1997, when the Asian financial crisis shook the region.
The central bank, however, implemented in 2005 a method of computing the BOP, so figures before and onwards to that point may not be directly comparable.
Meanwhile, 2014’s shortfall was still slightly lower than the $3.4-billion deficit the BSP had expected after a $864-million surplus was recorded in December last year.
This year, the BSP expects the Philippines’ BOP to return to a surplus of $2 billion this year.
Q1 current account more than doubled
The BSP said in a separate statement that the Philippines’ current account surplus more than doubled to $3.3 billion in the first quarter of the year, from $1.5 billion in the same period last year.
The current account is a main component of the BOP. This reflects fund flows from import and export of goods and services, and the transfer of income in and out of the country.
“The notable improvement in the current account surplus was attributed to higher net receipts in the services, primary and secondary income accounts coupled with the narrowing of the trade-in-goods deficit,” the BSP said.
The primary income is the profit from Philippine investments abroad and income of overseas Filipino workers (OFWs) with contracts of not more than a year. The secondary income records remittances of OFWs whose contracts are more than a year.
The Philippine primary income account logged net receipts of $1.1 billion in 2014, higher than the $66 million seen a year ago.
Meanwhile, net receipts in the secondary income account inched up to $5.2 billion from $5 billion.
The current account is expected to account for the 4.4% of gross domestic product this year, higher than last year’s 2%. – Rappler.com
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