BSP ups investment, BOP targets

The Bangko Sentral ng Pilipinas (BSP) is upgrading its investment targets and balance of payments (BOP) projections for 2005, factoring in positive developments that monetary officials expect to boost inflows this year.

The BSP expects the country’s BOP position to settle at a $464 million surplus but monetary officials said this number is likely to be better than originally expected after considering the impact of recent developments that are not included in earlier assumptions.

BSP Assistant Governor Diwa Guinigundo told reporters yesterday that the BSP wanted to consider the impact of a number of significant developments that would have an impact on its assumptions.

These factors include the increase in the excise taxes on cigarettes and alcohol, the Supreme Court decision allowing foreign interests into local mining companies and the country’s removal from the black list of the Financial Action Task Force on Anti Money-Laundering.

"These are non-economic factors that will have an impact on investments, both portfolio and direct equity," Guinigundo said.

BSP Governor Rafael B. Buenaventura has projected that portfolio investments can easily triple this year, especially if the Arroyo administration delivers the rest of its promised reforms beginning with the final adjustment in power rates.

"We are right now enjoying some modicum of credibility as investors wait for further reforms," Buenaventura said. "We have to tread carefully not to lose this credibility and in fact build on it," he added.

Being removed from the blacklist of the Financial Action Task Force (FATF), according to Buenaventura, vastly improved the prospects in the domestic capital market on top of positive indicators that are already triggering some degree of optimism among foreign investors.

According to Buenaventura, current inflow levels are durable but only if the national government does not ruin its own momentum. "It can be more durable and sustainable if we do all these things we have to do. All these good things are really up to us," he said.

Buenaventura said the stockmarket was showing signs of life that investors are watching carefully such as Semirara Mines’ prospects and the developments in the mining sector as a whole.

"If wont happen overnight but these are possibilities that were not present before," Buenaventura said.

Even if the country was downgraded by Moody’s Investors Inc, Buenaventura said it would only be for lack of track record.