THE country’s balance of payments surplus fell sharply in November because of the uncertainties in advanced economies, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Data from the BSP showed that the country’s BOP registered a surplus of $364 million last month, down by 90.7 percent from $3.903 billion in the same period last year.

Last month’s figure brought the cumulative surplus to $10.293 billion, down 21.31 percent from $13.082 billion in the same period last year. BSP Deputy Governor Diwa Guinigundo said the Philippines has not been spared from the negative effects of persistent global turmoil, which was reflected in volatile movements in regional currencies, increased risk aversion and waning market confidence.

He said inflows from foreign exchange operations of the central bank, income from investment abroad and currency deposits of the national government contributed to the BOP surplus during the period.

These inflows were however offset by external debt payments of the government. The BOP is a summary of the economic transactions of a country with the rest of the world.

Trade in goods, services, income and current transfers fall under the current account transactions.
Sales abroad of Philippine-made goods fell 14.6 percent for a sixth consecutive month in October to $4.09 billion from $4.79 billion in the same period last year.

Remittances—as receipts recorded under the income sub-account—have been resilient, growing by 6.2 percent year-on-year to $1.8 billion in October.

Given the country’s favorable external payments position, the country’s gross international reserves reached $76.350 billion in November, up 26 percent from $60.565 billion in the same period last year. At this level, reserves can cover 11.2 months’ worth of imports of goods and payments of services and income.

They were also equivalent to 10.7 times the country’s short-term external debt based on original maturity and 6.5 times based on residual maturity. This debt refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

The BSP holds international reserves for the foreign exchange requirements of the country in case the domestic commercial banks’ supply of dollar and other convertible currencies falls short demand.
The foreign assets that the BSP held were mostly in the form of investments in foreign-issued securities, monetary gold and foreign currency, of which 13 percent was in US dollars.

An ample GIR level helps the peso to strengthen, thereby keeping domestic inflation at bay.