MANILA, Philippines - The country’s balance of payments (BOP) position posted a surplus in January as the flow of foreign capital recovered amid the economic uncertainty in the US and the debt crisis in Europe.
Data released by the Bangko Sentral ng Pilipinas (BSP) yesterday showed that the BOP posted a surplus of $864 million in January from a deficit of $114 million in December.
However, last month’s surplus was 46.2 percent lower than the $1.606 billion booked in January last year. The BSP sees the country’s BOP surplus hitting $2.8 billion this year.
The BOP position refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world.
The country’s BOP surplus fell 28.8 percent to
$10.179 billion last year from $14.308 billion in 2010 due to the sudden reversal of foreign capital inflows towards the end of the year amid the contagion from the fragile economic recovery in the US as well as the sovereign debt crisis in Europe.
Originally, the BSP expected the BOP surplus to hit $6.7 billion last year. The original target was breached as early as August last year due to strong capital flows to emerging market economies including the Philippines, prompting authorities to raise the target to $10 billion.
However, the growth of the country’s external payments position slowed down towards the end of last year due to the heightened debt crisis in Europe as well as the economic uncertainty in advanced economies led by the US.
The country’s gross international reserves (GIR) surged 21.3 percent to a new record level of $77.043 billion in January from $63.54 billion in the same month last year due to strong inflows from the US dollar bond issuance of the National Government as well as the revaluation of the gold holdings and robust earnings from overseas investments of the BSP.
The GIR is the sum of all foreign exchange flowing into the country.
The BSP sees the country’s GIR hitting a record level of $79 billion this year. The end-2011 GIR reached $75.302 billion and was lower than the revised full-year target of $76 billion.
The strong external payments position gives the country enough buffer to survive external shocks arising from the economic uncertainties in advanced economies led by the US as well as the sovereign debt crisis in Europe. - By Lawrence Agcaoili