BOP posts $2.076-B surplus
Des Ferriols
Philippine Star
Easing foreign exchange outflows and a corresponding surge in inflows propelled the country’s net reserves back to a surplus of $142 million in July, reversing the $248-million deficit in June to bring the seven-month surplus to $2.076 billion.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s balance of payments (BOP) position bounced back in July as remittances soared to a record $1.5 billion.
The BOP is the sum of the country’s transactions with the rest of the world paid out of the foreign exchange reserves. Last year, the country posted a surplus of $8.6 billion but this year, officials expect only about $2.5 billion.
BSP Governor Amando M. Tetangco Jr. said the BOP also received a boost from foreign exchange receipts from the privatization of power assets sold by the Power Sector Assets and Liabilities Management Corp (PSALM).
Tetangco said the July inflows were enough to reverse the BOP deficit in June, the first monthly BOP deficit the BSP reported since November last year.
The BSP said heavy foreign exchange outflows also eased in July when the country’s gross international reserves (GIR) neared the $37-billion mark.
The BSP said the major inflows which contributed to the increase in reserves included deposits by PSALM of proceeds from the privatization program of the National Power Corp. (Napocor).
The BSP projected that the country’s GIR would reach $37 billion this year, expressing optimism the country’s BOP would still be at surplus level.
Although reaching record highs this year, however, the BOP position has been under significant stress from the surges in oil prices that eroded the reserves.
The BSP said the country’s BOP surplus could dip even lower than the projected $2.5 billion level this year and monetary officials are re-examining their numbers to determine just how low.
This year, however, sources from the policy-making Monetary Board said the BOP position could be even lower than latest projections, mainly due to huge outflows of foreign portfolio investments.
Sources said the Monetary Board has asked the BSP to review its projections as they suspected the BOP surplus was being eroded faster than expected.
Of particular concern was the capital account where foreign portfolio investments were booked as they enter and leave the country. Although the outflow had eased somewhat, foreign direct investments were still significantly slower than expected.
Foreign direct investments suffered heavily under the strain of market pessimism, even posting a net outflow in May that slowed down the overall inflow by over 68 percent in the first five months of the year.
The drastic slowdown in foreign investments was not unexpected, however and the BSP has already projected that total inflow this year would drop from $4.2 billion in 2007 to $2.6 billion.
Foreign direct investments, according to the BSP, would suffer from the impact of slower demand in development markets which had discouraged direct investments into industries that were originally expected to attract investors this year such as mining.
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