RCBC chief economist Michael Ricafort
MANILA – Philippines’ balance of payment (BOP) position improved last August after posting a surplus of USD657 million, and an economist forecasts this to be sustained as the government continues to re-open the economy.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the BOP surplus last August was higher than the previous month’s USD8 million surplus and year-ago’s USD493 million surplus. The year-to-date surplus amounts to USD4.774 billion.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort attributed the improvement in the country’s BOP position in the eighth month of this year for the recovery of inflows from overseas Filipino workers (OFWs) and the country’s exports.
BOP summarizes the balance of a country’s transactions with the rest of the world.
“BOP surplus could still pick in the coming months, partly due to the recent increase in foreign borrowings by the largest local companies/conglomerates as encouraged by near-record low interest rates/borrowing costs, as well as the continued foreign borrowings by the government from multilateral institutions and possibly from other commercial sources to fund Covid-19 programs, infrastructure spending, and other priorities under economic recovery program; the proceeds of which could be added to the country's GIR (gross international reserves) well into new uncharted highs,” he said.
Ricafort said additional economic easing measures both here and abroad are also expected to boost structural US dollar inflows like OFW remittances, foreign investments, and revenues of the business process outsourcing (BPO) sector.
While these inflows “could still post year-on-year declines”, he said these are still expected to register net inflows.
He added that since health protocols remain in place to lessen the chances of coronavirus disease 2019 (Covid-19) spread, this is still positive for the country’s BOP position because it will "lead to relatively slower pick up in imports that would still lead to relatively narrower trade deficits.”
The surplus in the BOP position also bolsters the country’s GIR which, in turn, supports the peso, he added.
To date, the local currency is trading to its near four-year high against the US dollar at 48-level. (PNA)
