Big drop in BOP surplus seen this yr

The Bangko Sentral ng Pilipinas (BSP) is projecting a much lower balance of payments (BOP) surplus of $2.4 billion this year compared to the 1999 surplus of $3.2 billion.

The gross international reserves (GIR), on the other hand, is expected to hit more than $17 billion this year from $15 billion a year ago.

The BOP and GIR projections, however, have to be presented to an International Monetary Fund (IMF) review team that will visit the country either by the end of this month or in February, sources said.

Sources explained that the lower BOP projection this year will be due to an expected narrowing of the current account.

In fact, based on the BSP's simulations, the current account -- which records the country's trade, services and loans -- would eventually revert to a deficit as imports again outpace exports in the medium-term.

The BOP and GIR projections have to be approved by the IMF as part of the government's overall economic program.

The Philippines is still under a standby arrangement program with the IMF until June this year and the Estrada Administration has already indicated that it will seek another program when the current arrangement expires in June.

Based on the BSP's other economic projections for this year, growth is targetted at 4.5 percent to 5.5 percent while inflation is expected to range from six to seven percent this year.

The review, sources said, may be delayed a bit until February due to the reshuffle in the Department of Finance and the Department of Trade and Industry.