Philippine Daily Inquirer
8:12 pm | Monday, May 20th, 2013
The country’s balance of payments (BOP) reversed to a surplus in April as robust dollar inflows, mainly remittances and foreign investments, exceeded outflows.
The Bangko Sentral ng Pilipinas reported Monday that the BOP recorded a surplus of $274 million in April compared with a deficit of $79 million in the same month last year.
This brought the BOP in the first four months of this year to a surplus of $1.81 billion, up by 56 percent from the $1.16 billion yielded in the same period last year.
An indicator of a country’s foreign-exchange liquidity, BOP measures the country’s commercial transactions with the rest of the world and shows the difference between inflow and outflow of foreign currencies, mainly the US dollar.
A surplus in the BOP adds up to the country’s overall reserves of foreign exchange, called the gross international reserves (GIR).
The GIR, which currently stand at about $84 billion, indicate a country’s ability to pay for imports, settle debts to foreign creditors, and engage in other commercial transactions with entities from other countries.
The country’s biggest sources of foreign exchange are remittances, foreign investments in the business process outsourcing sector (which includes the call centers), foreign investments in peso-denominated securities and export revenues.
Outflows are led mainly by payment for imports and settlement of debt to foreign creditors.
The BOP surplus so far this year came about as the Philippines continued to enjoy rising remittances from overseas Filipino workers. It also caught the attention of more foreign investors following its attainment of investment grades.
The country got its first investment grade from Fitch Ratings, which raised the country’s rating by a notch from BB+ to BBB-, the minimum investment grade.
Fitch’s decision was followed by a similar move by Standard & Poor’s, which also upgraded its rating for the Philippines by a notch to the minimum investment grade.
The rating agencies cited the country’s favorable liquidity of foreign exchange, as evidenced by its BOP and GIR, as one of the reasons for the investment grades.
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Tags: balance of payments , Bangko Sentral ng Pilipinas , Business , News , Standard & Poor's
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