BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. said the revised $2-billion surplus target on the balance of payments this year is realistic after the position remained in surplus for the third month since March.
Data from Bangko Sentral Monday showed the balance of payments posted a surplus of $241 million in May, a significant turnaround from the $58-million deficit a year ago. It was also higher than the $184-million surplus recorded in April this year. The May figure brought the balance of payments in the first five months to a surplus of $216 million, lower than the $1.199-billion surplus in the same period last year.
“The surplus for May was mainly due to inflows from BSP operations and income from its investments abroad which more than offset the payments for national government’s maturing foreign exchange obligations,” Tetangco said in a text message.
He said the country’s macroeconomic fundamentals remained solid, citing the sound and stable banking system and manageable inflation environment.
“… We can expect to register more inflows in the months ahead. The $2-billion projected BoP for full year is attainable, given the information [that] we have now,” Tetangco said.
The balance of payments summarizes the country’s economic transactions with the rest of the world, with a deficit indicating that foreign exchange payments outstripping receipts and a surplus the reverse.
Persistent surpluses help build up the country’s gross international reserves, an ample supply of which helps prop up the peso against the US dollar, and keep domestic inflation at bay.
Bangko Sentral Deputy Governor Diwa Guinigundo said inflows of remittances from migrant Filipino workers, business process outsourcing revenues, foreign direct investments and the re-flow of foreign portfolio investments buoyed the country’s balance of payments position in May.
Registered foreign portfolio investments or “hot money” in May posted a net inflow of $73 million, a turnaround from the $569-million net outflow a year ago due mainly to renewed investors’ interest in the domestic markets, coupled with the peaceful conduct of national elections.
Money sent home by Filipinos overseas in April grew 4.1 percent to $2.2 billion from $2.1 billion a year ago due mainly to sustained demand for local skilled workers abroad.
Last week, Bangko Sentral revised downward the balance of payments projection this year to $2 billion from the earlier assumption of $2.2 billion made in December 2015 due mainly to the expected continuous volatility in the global financial markets.
Guinigundo, however, said in a briefing that while the global financial environment was expected to remain volatile, the bullish business confidence was expected to support continued entry of foreign direct investments in the country.
He said Bangko Sentral considered global developments in revising the BoP assessment, such as the new uncertainties coming from the exit of Britain from the eurozone (Brexit). Guinigundo noted the Chinese economy as well as the European Union started to normalize.