PHL external payments position remains strong amid drop in BOP surplus — BSP

By Joann Santiago

MANILA, Jan. 20 (PNA) — The Philippines’ US$ 5.1 billion balance of payment (BOP) surplus in 2013 was below the central bank’s US$ 5.3 billion target but Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. is not worried.

In a text message to reporters Monday, the central bank chief said “strength of the country’s external payments position continues to be manifested in the BOP surplus.”

He even pointed out that full year surplus last year is higher than the earlier target of US$ 4.4 billion.

“Uncertainties about global economic developments, including the phasing of the withdrawal of monetary policy accommodation in the developed/mature economies have accentuated external risks to the BOP outlook,” he said.

Tetangco, however, noted that “the BOP surplus continues to draw support from fundamentally-driven foreign exchange flows, such as those in the current account that remains in surplus, from which the economy can build resilience against external headwinds.”

“The sustainability of the external payments surplus continues to be a real feat given ongoing vulnerabilities/challenges in the global economy,” he added.

Relatively, Standard Charter Bank economist Jeff Ng said that even if the BOP surplus last year was short of the central bank’s target “it is a positive in terms of respectable performances from the current account and financial account.”

“We expect the current account surplus to reach 4.3 percent in 2013, up from 2.8 percent (in the previous year) as remittances and export growth improve in the second half compared to the first half,” he said.

“The financial account likely dragged as a result of outflows triggered by the uncertainty over Fed tapering,” he added.

Data released by the central bank Monday showed continued decline in the country’s annual BOP surplus since hitting US$ 14.3 billion in 2010.

For last December alone, the surplus reached US$ 419 million, lower than the previous month’s US$ 837 million and year-ago’s US$ 640 million.

Among the drivers of the BOP are the remittances and foreign direct investments.

Remittances as of last November reached US$ 20.61 billion, 6.1 percent higher than the US$ 19.42 billion same period last year.

For last November alone, inflows that passed the formal channel registered its highest monthly inflows of US$ 2.063 billion.

Also, foreign direct investments as of last November reached US$ 254 billion, up from year-ago’s US$ 153 million but lower than the previous month’s Us$ 319 million.

Monetary officials said the Philippines continues to attract foreign investments despite volatile global financial environment because of the domestic economy’s strong fundamentals.

For 2014, the BOP surplus target is US$ 3 billion, lower than last year’s target because of expected slight drop in the current account due to widening of imports as the country undertakes rehabilitation of areas devastated by Typhoon “Yolanda”. (PNA)