MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) believes that the country posted another balance of payments (BOP) surplus in August due to strong foreign exchange inflows brought about by the steady increase in remittances sent home by overseas Filipino workers (OFWs).
BSP Governor Amando M. Tetangco Jr. said in an interview with reporters there are indications that the country booked another surplus in its BOP position for August.
“The indications are that in August there is also another surplus in the BOP,” Tetangco stressed.
This would be the six straight months that the country posted a BOP surplus. The country’s BOP position last registered a deficit in February with $125 million.
The BOP refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions
with the rest of the world.
Latest data from the BSP showed that the country’s BOP surplus grew by 22.2 percent to $3.326 billion in the first seven months of the year from $2.722 billion in the same period last year on the back of strong investment inflows and higher OFW remittances.
Central bank data showed that the country’s BOP surplus stood at $3.326 billion from January to July or $604 million higher than the $2.722 billion surplus booked in the same period last year.
The BSP chief said the Philippines continue to lay down favorable environment for foreign investments through stable macroeconomic fundamentals and benign inflation.
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“We have a favorable environment for foreign investments because of the favorable macroeconomic environment and benign inflation,” Tetangco added.
The country’s domestic output as measured by the gross domestic product (GDP) posted a surprising expansion of 7.9 percent in the first half of the year from 1.2 percent in the same period last year. This after the country posted a stronger-than-expected GDP growth of 7.9 percent in the second quarter and the revised GDP expansion of 7.8 percent in the first quarter of the year.
Economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) raised the country’s GDP growth target last July to a range of five percent to six percent instead of 2.6 percent to 3.6 percent this year.
The BSP’s sees the country’s BOP surplus hitting $3.7 billion instead of the original target of $3.2 billion due to robust foreign exchange inflows from the higher investment inflows, disbursement of official development assistance (ODA) loans from multilateral lending agencies, and the money sent home by Filipinos abroad.
The country’s BOP surplus plunged to $89 million in 2008 from $8.67 billion in 2007 due to the full impact of the global financial crisis. The BOP position recovered last year with a surplus of $5.295 billion. This year’s surplus would stabilize as the growth of imports would outpace the growth of exports.
The central bank is confident that foreign direct investment (FDI) inflows would hit $2 billion this year form $1.95 billion last year. It also sees inflows of foreign portfolio investments or “hot money” hitting $2.9 billion this year or 747 percent higher than the $388.02 million registered in 2009.
Likewise, the central bank has raised its OFW remittance growth forecast to eight percent instead of six percent this year and the country’s gross international reserves (GIR) to hit a new record level of $50 billion instead of $48 billion this year.
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Source: Philstar