BOP surplus seen to hit $4.9 billion

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) expects the country’s balance of payments (BOP) to post a surplus of $4.9 billion this year on the back of robust remittances from overseas Filipinos, higher government borrowings, and strong foreign portfolio investment inflows.

BSP Deputy Governor Diwa Guinigundo said in a press conference that the projected BOP surplus is about $4.811 billion higher than the $89 million surplus registered in 2008.

“The BOP surplus is projected at about $4.9 billion and I think it will be achieved,” Guinigundo stressed.

Latest data showed that the BOP surplus jumped 11-fold to $4.08 billion in the first 11 months from $364 million in the same period last year. The BOP refers to the difference between the inflows and outflows of foreign exchange.

Monetary authorities said strong overseas Filipino workers’ (OFW) remittances, robust portfolio investments, and loan proceeds from foreign commercial borrowings of the National Government continued to boost the country’s BOP position.

Instead of a zero-growth, the BSP is now looking at a four percent growth in OFW remittances to a record level of $17.1 billion this year from $16.4 billion last year.

OFW remittances climbed 4.5 percent to $14.321 billion in the first 10 months of the year from $13.707 billion in the same period last year due to strong demand for skilled Filipino workers and the increasing number of remittance centers all over the world.

The National Government, which is in dire need of funds to finance its swelling budget deficit, borrowed $3.25 billion through the issuance of foreign-denominated bonds in the international capital market. The amount was higher than the $2 billion borrowed by the government last year.

The Philippines is staring at a record budget deficit this year due to weak tax take brought about by the global economic slump as well as accelerated spending with the implementation of the P330-billion Economic Resiliency Plan.

The government expects to book an all-time high budget deficit of P250 billion or 3.2 percent of gross domestic product (GDP) this year, eclipsing the previous record of P210.7 billion or 5.3 percent of GDP booked in 2002.

The deficit, however, could swell to about P300 billion as the shortfall ballooned to P272.5 billion in the first 11 months of the year due to lower tax take and higher spending.

Guinigundo said the country’s foreign portfolio investments would hit a little over $2.5 billion instead of the projected $3 billion.

He added that the current account recorded a surplus of $6.2 billion or about 5.4 percent of GDP in the first nine months of the year or equivalent to the full-year target of $6.2 billion. This was more than thrice the $1.7 billion surplus recorded in the same period last year.

“This developed as the more favorable performance of the current transfers and trade-in-goods accounts more than offset the relatively weaker balances in the services and income accounts,” said BSP director Rosabele Guerrero.