First-quarter BoP surplus drops as gov’t pays more debt

The country’s payment surplus dropped by more than a fifth in the first quarter after the government paid more debts this year, the Bangko Sentral ng Pilipinas (BSP) said. Central bank data showed that the country’s balance of payments (BoP) remained positive in the first quarter with a surplus of $1.36 billion, but lower than $1.73 billion a year earlier. The BoP is a summary of the country’s transactions with the rest of the world. A surplus means more foreign exchange entering, improving the country’s ability to repay external debt. An official from the BSP’s Department of Economic Statistics traced the lower surplus to debt payments worth $2.9 billion from $2.4 billion last year. For March alone, the Philippine payment position hit a surplus of $255 million, a turnaround from a deficit of $472 million a year earlier. The official said the main source of inflows last month was proceeds of the government’s $1.1 billion worth of yen bonds sold to Japanese investors. BSP Governor Amando M. Tetangco Jr. traced the overall surplus to money sent home by Filipino workers abroad, export revenues, portfolio investments and government borrowings. "This healthy external position intensifies our buffers against potential external vulnerabilities," he said in a text message. Net hot money inflows surged more than five times in the first quarter to $385 million, as prospects for Asia growing faster than the rest of the world inspired investors to put their money in Philippine stocks. Remittances from Filipinos overseas have reached $2.8 billion as of February, 7.8 percent higher than a year earlier. Exports, meanwhile, continued growing for the fourth straight month in February, bringing in $7.145 billion in the first two months. The central bank expects the payment surplus to hit $3-$4 billion this year from $5.295 billion last year. — Don Gil K. Carreon, BusinessWorld