NextGen Day

An economist predicts that the Philippines’ balance of payments (BOP) position will continue to improve in the months to come as structural US dollar inflows increase. The country’s BOP position reversed to a surplus in December 2022 to USD 612 million.

The Bangko Sentral ng Pilipinas (BSP) issued data on Thursday that indicated that the BOP position, which is the entirety of a country’s commerce with the rest of the world, improved from the month before’s USD756 million deficit but decreased from the year-ago USD991 million surplus in December. The most recent data increased the BOP position’s deficit from USD1.35 billion at the end of 2021 to USD7.26 billion at the end of 2022.

Michael Ricafort, chief economist of Rizal Commercial Banking Corporation (RCBC), attributed the improvement in the country’s BOP position at the end of last year in part to a seasonal increase in remittances from OFWs during the Christmas season as well as to an uptick in business process outsourcing (BPO) revenues, exports, and foreign tourism receipts, the latter of which was brought on by the reopening of the country to foreign visitors.

He said that the reduction in oil and other commodity prices on the global market, partly due to the potential US recession, helped strengthen the BOP position by bringing the country’s trade imbalance to its lowest point in more than a year.

However, it is believed that these reasons have been offset by the national government’s net payments of its liabilities denominated in foreign currencies and the country’s larger trade imbalance due to rising commodity prices, particularly as a result of the Russia-Ukraine war.

Following the issuance of a $3 billion global bond in US dollars by the national government, improvement in the country’s BOP position and gross international reserves (GIR) is anticipated to continue this month.

The profits from the anticipated US dollar retail bond issuance in the first half of 2023, which is expected to be worth roughly $3 billion and have a tenor of at least five years, would also help the nation’s BOP and GIR in the upcoming months of 2023, the official continued.

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