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BSP bullish on $2B BOP surplus goal

Monetary officials are confident of hitting the central bank’s USD2 billion balance of payment surplus assumption for 2016 on continued strong prints of its various components.

Last August alone, the country registered a USD 682 million BOP surplus, higher than month-ago’s USD 215 million surplus and a reversal from the USD 450 million deficit same period last year.

This brought the eight month’s total to USD 1.53 billion, slightly lower than the USD 1.59 billion during the same period in 2015.

“With a cumulative BOP for the eight months of USD1.531 billion, the projection for full year is within reach,” BSP Governor Amando Tetangco Jr. said in a text message to reporters Monday.

The central bank chief attributed the continued rise of the surplus to gains from the central bank’s foreign exchange operations and the foreign exchange deposits of the national government (NG) with the BSP.

He, however, said these inflows were countered by NG’s payments of its maturing foreign debts.
Tetangco said the monetary officials “continue to monitor global developments and market sentiment” vis-à-vis the policy rate decisions in advance economies since “these could lead to global portfolio rebalancing away from EMEs (emerging market economies) including the Philippines.”
“Nevertheless we don't see any need to deviate from the current stance of keeping a market determined exchange rate policy,” he added.
The Federal Open Market Committee and the Bank of Japan will have their respective policy meetings on Sept. 21.
BSP Deputy Governor Diwa Guinigundo, in a text message, said continued growth of remittances from overseas Filipinos remained a major factor to the country’s BOP position.
Central bank data show that as of end-July this year, cash remittances grew by three percent year-on-year to USD 15.3 billion.
Guinigundo said higher revenues of the business process outsourcing  sector as well as tourist receipts also boosted the BOP surplus.
Net inflow of foreign direct investments, which in the first half of the year grew by 94.9 percent to USD 4.2 billion, is another positive factor, he said.
Foreign portfolio investment, otherwise known as hot money due to the speed it comes in and out of the economy, is another contributor after the end-August level posted a net inflow of USD 2.07 billion, a turn-around from the USD 64.26 million net outflow a year ago.