OFW remittances, FDIs trim RP’s BOP deficit to $1.3B

The Christmas holiday remittances of overseas Filipinos workers (OFWs) overseas as well as substantial foreign direct investments that came in could reduce the balance of payments (BOP) deficit to just $1.3 billion.

Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura said the dollar inflows that came rather belatedly will allow the BOP to stay at least at the level of $1.3 billion.

This is better than an earlier projection which painted a worst case scenario of BOP deficit hovering between $1.9 billion and $2.3 billion because of the earlier contraction of export receipts and lack of direct foreign investments.

"It looks like a deficit (in the BOP) of $1.3 by yearned is practically set," he said.

The BSP chief said dollar remittances from overseas workers were substantial enough to matter in containing the BOP deficit. It is during the Christmas season that overseas workers send their remittances to their relatives.

Moreover, the buy-in of the Atlanta-based Coca-Cola Bottlers into local concern Cosmos Bottling for about $200 million, along with the San Miguel Corp.-Kirin Brewer deal for another $540-million bolstered capital accounts.

"There was significant foreign investment in fixed-income securities, not necessarily equities," Buenaventura said, citing proceeds from government’s four-year note arranged by JP Morgan Chase further boosted the inflows.

Buenaventura added that should the SMC-Kirin and Cocacola-Cosmos deals push through, these investments will help the external sector survive the first quarter.

"These investments could help us because the first quarter is going to be weak. That is why Budget Secretary Emilia Boncodin is front-loading expenditures in the first quarter and cut back on the second."

Buenaventura is also optimistic that exports would likely fall by less than 15 percent for the whole year.

"Recent numbers show that export contraction would be less than 15 percent and will not reach 18 percent as earlier forecast," Buenaventura said.

This and other favorable factors such as the recovery of some export sectors such as garments should help in stabilizing the exchange rate. – Rocel Felix