RP surplus rose to record $4.54b

PHILIPPINE NEWS SERVICE — The Philippines posted a record-high balance of payments surplus of $4.54 billion in the first seven months of the year on higher exports, steady remittances and heavy investments, the Bangko Sentral ng Pilipinas reported yesterday.

The BoP surplus in July alone hit $1.343 billion, the highest posted in a single month since January 2006.

Central bank Gov. Amando Tetangco Jr., in a mobile phone text message to reporters, said “the large BoP surplus for January to July was due to sustained [migrant Filipino workers’] remittances, significant increase in foreign portfolio flows and large improvement in the balance of trade with higher exports.”

“The surplus could have been higher without pre-payments of foreign obligations.”

The BoP is a record of the country’s transactions with the rest of the world. A surplus indicates the Philippines generated more foreign exchange than what it had to pay out. The BoP surplus was chiefly responsible for the peso’s appreciation since the beginning of the year.

Tetangco said the outlook on the BoP continues to be positive.

The central bank is looking to increase its BoP surplus and gross international reserves target after first-half figures exceeded full-year projections.

The huge BoP surplus allowed the central bank to beef up its international reserves, which also reached all-time highs.

The central bank had initially expected the BoP surplus this year at $2.9 billion and the international reserves at $26 billion to $26.5 billion. At the end of July, however, the foreign reserves had reached $27.9 billion.

The BoP also hit $5 billion by Aug. 3 because of huge investment flows. Recent events, specifically the fallout from the US subprime crisis, however, unnerved the local market as foreign investors scrambled for liquidity.

The impact of the market plunge on the external account will not be evident until the numbers are released next month.

Significant increases in the central bank’s interest income, meanwhile, were wiped out by huge paper losses from the peso’s appreciation that brought the net loss of the central bank to P31.73 billion.

In an unaudited first-half income statement, the central bank reported a P10.1-billion net income before losses from foreign exchange fluctuations, more than 10 times the P980 million it reported in the same period last year.

Revenues increased by more than 50 percent to P38.55 billion from P25.92 billion a year ago because of increases in both interest and miscellaneous income.

Expenses grew 14 percent to P28.45 billion due mainly to higher interest expenses from its mop-up operations. The central bank as of end-June had siphoned off P282 billion in its special deposit account facility and some P194.4 billion from its reverse repurchase agreement facility.