Activity #3

Philippines gross international reserves hit record high in August

The Philippine central bank said, the Philippines' gross international reserves (GIR) level rose by US$350
million to $98.95 billion as of end-August from the end-July level of $98.6 billion by MANILA(Xinhua)
And on Wednesday (Sept 16) the month-on-month increase in the GIR level reflected inflows mainly from the
BSP's foreign exchange operations and income from its investments abroad.
However, the BSP added that these inflows were partly offset by the foreign currency withdrawals made by the
national government to pay its foreign currency debt obligations and revaluation losses from the BSP's gold
holdings resulting from the decrease in the price of gold in the international market.
However, the inflows were partly offset by the foreign currency withdrawals made by the national government
The BSP said that the GIR level at the end of August reflects a more than sufficient external deducted that
could cushion the domestic economy amid external shocks.

"This buffer is equal to nine months' worth of imports of goods and payments of services and primary profits.
Moreover, it is also about 7.6 times the country's short-term external debt on the basis of its former maturity
and 4.8 times the residual maturity," mentioned by the BSP.

Correspondingly, the BSP announced that the net foreign reserves (NIR), which refers to the gap between both
the BSP's GIR and the total short-term liabilities, rose by $354 million to $98.95 billion at the end of August
from $98.59 billion at the end of July.

Therefore, the GIR level of the Philippines rose high at the end of the month in august. The inflow we’re partly
offset by the foreign currency withdrawals made by the national government to pay its obligation and
revaluation losses from BSP wherein the depletion in prices of gold in the market internationally. At the end of
august, the GIR level reflects a more than sufficient external deducted that could cushion the domestic
economy amid external shocks. The BSP announced that the net foreign reserves (NIR), which refers to the
gap between both the BSP's GIR and the total short-term liabilities, rose by $354 million to $98.95 billion at the
end of August from $98.59 billion at the end of July

Source:

https://www.bignewsnetwork.com/news/266421373/philippines-gross-intl-reserves-hit-record-high-in-
august#:~:text=MANILA%2C%20Sept.,Philippine%20central%20bank%20has%20said.
Balance of payments stays in surplus for 7th month in a row
The Philippines posted a balance of payments (BOP) surplus for the seventh month in a row in August,
predominantly up for foreign government borrowing for its disease outbreak response.
Records from Bangko Sentral ng Pilipinas (BSP) showed that the $657 million surplus recorded in August was
33 per cent higher than the $493 million surplus recorded a year ago and substantially higher than the $8
million surplus recorded in July. This is also the biggest surplus since May's $2,431 billion.

"The August BOP surplus mainly reflected the inflows from the foreign exchange operations of the BSP and
the profits from its foreign investments," the central bank said.
The BOP demonstrates the country's economic transactions with the rest of the world for a given time.
Annually, the BOP had a surplus of $4,774 billion, 13.6 per cent smaller than the $5,529 billion surfeit in the
period from January to August 2019.

The central bank said "The current BOP shortfall was predominantly funded by foreign borrowing by the
National Government along with a lower net merchandise trade deficit.1 These results completely offset the
effect of higher net outflows of foreign portfolio investment and lower overall inflows from foreign direct
investment, trade in services and personal remittances".

Government borrowings from January to July amounted to P1.857 billion , up 121% from P839.7 in a same
period of 2019, and according the data from the Treasury Board. In July alone, borrowings amounted to P135
billion, of which P67.7 billion came from foreign lenders.

For the end of 2020 the BSP expects BoP to have a surplus of $600 million, which is equal to 0.2% of the
gross domestic product of the country.

The new BoP status also represents the final record high foreign reserves of $98.95 billion at the end of
August, up 15 per cent from $86.031 billion a year earlier and 0.35 per cent from $98.6 billion at the end of
July.

"This is equal to 9.8 months of imported goods and payments of services and of primary profits. Furthermore, it
is now around 9 times the country's short-term external debt based on its original maturity and 5.4 times on the
basis of its residual maturity, "said BSP.

The Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the sustained slowdown in
imports will likely contribute to a possible surplus in the BOP in the coming months
In July, the trade deficit was $1,827 billion, smaller than the $3,641 billion difference in the same month last
year, and according the data from the Philippine Statistics Authority. In the first seven months of the year, the
balance of trade peaked at a deficit of $12,501 billion, down from a trade gap of $24,066 billion in the
corresponding seven months of 2019.

The import bill decreased by 28.1 percent year on year to $46.636 billion in the period from January to July
2020.

Mr. Ricafort added, “Sustained recovery in OFW remittances, exports, as well as in business process
outsourcing revenues would also help sustain BoP surpluses in the coming months,”
Spending of money have been trying to recover since the fall seen from March to May due to the pandemic
crisis in June. In July, cash remittances rose 7.8 per cent from $2,581 billion to $2,783 billion. Unfortunately,
year-to-date inflows from $17,219 billion remained down by 2.4% to $16,802 billion.
“The next months until the end of the year, I expect more of the same for the BOP until the veil of the pandemic
is finally lifted,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a text
message. — Luz Wendy T. Noble 
In conclusion, the balance of payment in the Phillipines show positive results amidst the pandemic. As we see that the
$657 million surplus recorded in August was 33 per cent higher than the digits recorded a year ago and
substantially higher than the $8 million surplus recorded in July. This is also the biggest surplus since May's
$2,431 billion. The trade deficit was smaller than the recorded a year ago. From January to July 2020 the import bill
decreased by 28.1 percent year on year. In July, cash remittances rose 7.8 per cent from $2,581 billion to $2,783
billion. Unfortunately, year-to-date inflows from $17,219 billion remained down by 2.4% to $16,802 billion.

Source:

https://www.bworldonline.com/balance-of-payments-stays-in-surplus-for-7th-
month-in-a-row/