An economist forecasts a sustained rise of the country’s balance of payment (BOP) surplus which rose to USD6.88 billion in end-September, benefiting the peso and the foreign reserves.
The BOP refers to a country’s total transactions with the rest of the world in a given period. A surplus results if a country exports more than it imports, among others.
The Bangko Sentral ng Pilipinas (BSP) reported that BOP surplus last September amounted to USD2.1 billion, higher than month-ago’s USD657 million surplus and year-ago’s USD38-million surplus.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the rise of the BOP surplus to narrower trade deficit due to slowdown in imports because of the pandemic, proceeds of foreign borrowings by both the government and the private sector, increase in foreign investments in the country and sustained inflows of remittances, revenues of the business process outsourcing (BPO) sector, and other income from abroad.
“Going forward, the sustained BOP surpluses may lead to new record high [gross international reserves] well above USD100 billion in the coming months, thereby providing greater cushion/support/buffer for the peso exchange rate vs. the US dollar especially vs. speculative attacks,” Ricafort said.