The Bangko Sentral ng Pilipinas said Thursday it upgraded its targets for the balance of payments, gross international reserves, foreign portfolio investments, and current account this year on expectations global trade will soon improve despite the lingering health crisis.
Latest BSP projections released to the media on Thursday showed the balance of payments was expected to yield a surplus of $6.2 billion in 2021, up from the $3.3-billion surplus estimate made in December 2020.
The gross international reserves are projected to reach an all-time high of $114 billion by end-2021, up from the previous estimate of $106 billion and the actual $110 billion in 2020.
Portfolio investments or hot money are expected to post a net inflow of $5.7 billion this year, representing an increase from the earlier estimate of $3.5 billion.
Current account, one of the components of the balance of payments, is seen to post a $9.1-billion surplus in 2021, also higher than the $6.1-billion surplus estimate in December 2020.
The Bangko Sentral is keeping its 4-percent growth estimate for remittances this year.
The bank expects a lower BOP surplus of $3.8 billion and a current account surplus of $5.2 billion in 2022. GIR is expected to improve further to $117 billion by end-2022.
Hot money is seen to post a higher net inflow of $7.4 billion in 2022 while remittances are projected to grow 4 percent next year.
Data from the BSP showed that the BOP posted a record surplus of $16.02 billion and gross international reserves of $110.12 billion in 2020 amid the challenging global environment highlighted by the prolonged COVID-19 pandemic.
The BSP said that in December 2020, the BOP posted a surplus of $4.24 billion, significantly higher than the $1.57-billion surplus recorded in December 2019. The 2020 BOP surplus also surpassed the $8.1-billion surplus earlier projected by the BSP for the year.
The BOP surplus reflected inflows mainly from the BSP’s foreign exchange operations and income from investments abroad, and national government’s foreign currency deposits with the BSP of proceeds from the issuance of ROP global bonds.
Cash remittances also showed signs of recovery last year, declining by only 0.8 percent to reach $29.903 billion from the record $30.133 billion in 2019. This was stronger than the BSP’s earlier projection of a 2-percent remittance contraction for the year.
The strong BOP surplus and GIR supported the appreciation of the peso by more than 5 percent last year. The peso closed at 48.02 against the US dollar on the last trading day of 2020, its best finish in more than four years.
The local currency remained stable this year, closing at 48.68 against the greenback on March 18.