Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said Tuesday the balance of payments surplus target of $2 billion this year is “achievable,” based on positive performance in the first nine months.
“We are finalizing the balance of payments surplus revisions. Trade might be changed because of the actual performance in the first nine months… We [actually] look at all components but changes might be at trade and maybe portfolio investments,” Tetangco said at the sidelines of the Asia-Pacific Financial Inclusion Summit 2015 held at the Makati Shang-rila in Makati City.
Tetangco expressed optimism the overall trend would remain positive for the rest of the year and there would be a current account surplus and a positive overall balance of payments position.
“If you recall the January to September [period], the first nine months, the balance of payments position was $1.8 billion. The projected surplus for the year is $2 billion. So it is very close, it is achievable,” Tetangco said.
Registered foreign portfolio investments, one of the vital components of balance of payments, posted a net outflow for the seventh consecutive month in September due mainly to the slowdown in Chinese economy and its feared effects on other markets.
Data from the Bangko Sentral showed that portfolio investments, also called hot money, posted a net outflow of $323 million in September, slightly lower than $324-million net outflow a year ago. However, this was significantly lower than the $543 million net outflow in August this year.
This brought hot money in the first nine months to a net outflow of $413.9 million, also significantly lower than $853-million net outflow in the same period last year.
Bangko Sentral targets hot money to post a net inflow of $1.4 billion, higher than the previous assumption of $1.3 billion made in October last year.
The Bangko Sentral revises economic data twice a year, in May and October.
Balance of payments swung to a surplus of $219 million in September from a deficit of $450 million in August. The September surplus was also higher than $98-million surplus recorded in the same period last year.
This brought BoP to a surplus of $1.8 billion in the first nine months of the year, a sharp reversal of the $3.4 billion deficit a year ago.
The balance of payments summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments outstrip receipts and a surplus the reverse.
Persistent surpluses help build up the country’s gross international reserves, an ample supply of which supports the value of the peso and keeps domestic inflation at bay.