RCBC chief economist Michael Ricafort
MANILA – Remittances from overseas Filipino workers (OFWs) are expected to partly boost the country’s balance of payment (BOP) position in the coming months after the latter reversed into surplus last July following the deficits in the previous two months.
The Bangko Sentral ng Pilipinas (BSP) reported on Wednesday a USD642-million BOP surplus in the seventh month this year, better than the previous month’s USD312 million deficit and year-ago’s USD8 million surplus.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said receipts from the business process outsourcing (BPO) sector, foreign investments, and other structural US dollar inflows are also expected to improve the country’s BOP position.
“The CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) law has supported the stronger FDI (foreign direct investments) data recently that could still continue in the coming months, thereby could add to the BOP and GIR (gross international reserves) data,” he said.
The BOP is the statement of a country’s total transactions with the rest of the world at a particular time.
Ricafort said developments on the country’s vaccination program against coronavirus disease 2019 (Covid-19) and arrival of more vaccines are also seen to help lift investors’ confidence because these will support the continued reopening of the economy.
“Still near record high GIR may also further strengthen the country's external position, which in turn, fundamentally supports the country's relatively favorable credit ratings as seen recently,” he added.
BSP data show that as of end-July this year, the country’s foreign reserve reached USD107.15 billion, which is equivalent to 12.2 months’ worth of import of goods and payment of services and primary income.
International minimum threshold for GIR is a three months’ worth of import cover. (PNA)
