BSP says BOP surplus target still within reach

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. expressed confidence The that the Philippines may still close 2014 with a surplus in its balance of payments (BOP).

“Financial conditions have settled down since the initial forecasts were generated and our thinking to date is that ‘the forecast’ remains attainable,” Tetangco said, referring to the strong recovery in investment flows foreseen over the next few months.

A country’s BOP position is an indicator of the country’s capacity to stand against external economic crises that may trigger a shortage in the amount of foreign currency within the nation’s financial system. Foreign currency is vital for global business activities.

A surplus in BOP indicates a greater influx of foreign currency into the country; revealing that a larger amount of foreign money flowed into the country, than the amount that flowed out. On the other hand, a deficit in BOP reflects the opposite scenario.

The country’s BOP in July was at a surplus of $501 million; a marked improvement from June’s BOP deficit of $24-million.

Dollar deposits made by the government, as well as earnings from the BSP’s overseas investments likewise benefitted the Philippines.