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Economy in Brief

 Favorable Trends in the Philippine Balance of Payments  
by Louise Curley July 16, 2007

The Central Bank of the Philippines announced today that the "overall balance of payments" for June amounted to $834 million, $169 million above May and $602 million above June of last year. The overall balance of payments is defined by the Bank as equal to the change in reserve assets less the change in reserve liabilities.

Because of the identity underlying the balance of payments concept, the change in reserves is shown with its sign reversed in the balance of payments table. Thus in the Balance of Payments Table in the [email protected]EMERGEPR data base, the Change in Reserves has the opposite sign of the Overall Balance of Payments, as shown in the first chart. The Overall Balance is equal to the sum of the Current Account, the Capital and Financial Account and the Net Unclassified Items (Errors and Omissions).

The Philippines balance on current account has shown a surplus, more often than not, since mid 2001. The improvement in the current account has been due mostly to remittances from citizens working abroad. The balance on trade in goods and services continues to be negative. The second chart shows the quarterly balance on current account together with the balance on trade in goods and services and the balance on transfers (largely workers' remittances). These data are available only through the first quarter of 2007.

PHILIPPINE BALANCE OF PAYMENTS  (Millions U. S. $) Q1 07 Q4 07  Q1 06  Q/Q Chg  Y/Y Chg  2006 2005 2004
Current Account 1823 1676 1153 147 670 5022 1955 1628
Capital and Financial Account 154 -825 1427 974 -1185 -1722 1661 -1630
Net Unclassified Items -559 297 -459 -856 -100 469 -1206 -278
Overall Balance of Payments=Sum of above 1418 1150 2121 268 -703 3769 2410 -280
Change in Reserves -1418 -1150 -2121 -268 703 -3769 -2410 280
Current Account 1823 1676 1153 147 670 5022 1955 1628
Goods and Services Balance -1229 -2147 -1532 848 237 -7624 -9192 -7461
Net Transfer Balance 3445 3747 2911 -302 534 13189 11391 9160
Jun 07 May  07  Jun  06  M/M Chg  Y/Y Chg  2006 2005 2004
Overall Balance of Payments 834 665 232 169 602 3769 2410 -280
Change in Reserves
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