Tuesday, 19 January 2010

$5.3-B BOP surplus to blunt external risks

Jun Vallecera
Business Mirror

THE country’ balance of payments (BOP) exceeded expectations and ended 2009 as a surplus totaling $5.295 billion or about 60 times larger than the previous year’s surplus of only $89 million.

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. reported the sharply higher surplus against a backdrop of weak global environment and a local economy that many initially expected to fall into a recession.

In the end, the Philippines generated far more foreign-exchange earnings than it paid for trade, transfers and investments, helping insulate it further from a wider weakness.

“The full-year cumulative BOP came in higher than forecast due to the higher-than-projected overseas Filipino remittances and better-than-expected income from the BSP’s investments abroad as well as from capital flows,” he told reporters in a text message.

This, he said, will help “fortify our defenses against external vulnerabilities” such as sharply higher oil import prices or the need to borrow from the global debt markets.

There was a sharp rise in the BOP surplus in December alone totaling $1.215 billion and a reversion from the previous month’s deficit of just $93 million.

There were only two other months last year when the balance stood as a deficit—in March when this totaled $42 million and again in May, when the deficit stood at $55 million.

“The outlook for 2010 is for such a favorable external position to continue, which could then yield opportunities to further beef up our international reserves,” Tetangco said.

The New York-based think tank Global Source has credited the country’s healthy external sector for making up for the weakness of the fiscal sector looking down at the likelihood of a very large budgetary deficit for 2009. “Fortunately, healthy external accounts make up for fiscal weakness while sound monetary management keeps inflation perils at bay,” the think tank said in its latest readings of the macroeconomic situation of the Philippines.

The BSP previously reported OFW remittances totaling $15.8 billion in the first 11 months, or 5.1 percent higher than last year.

According to Global Source, the full 2009 OFW remittance level could grow by 5.2 percent instead, or by some $17 billion.

“Remittances grew above 5 percent despite a slump in major markets in 2009, and we have even higher hopes for the New Year, when inflows sent home by overseas Filipinos workers may rise by over 6 percent as prospects abroad improve.

“This means easily over $18 billion in OFW money coming in this year. A continued high unemployment rate in the US may remain a dampener to this scenario, however.

“Also, we cannot rule out possible lagged effects of the global crisis on employment in the Middle East, also a major market,” Global Source said.

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