BOP position seen to recover partly on OFW remittance inflows

MANILA – The balance of payment (BOP) position turned into deficit last November but an economist forecasts a reversal in the coming months partly on seasonal inflows of remittances during the Christmas holidays. 

 

The Bangko Sentral ng Pilipinas (BSP) reported the USD123-million BOP deficit last month, a turn-around from the USD1.47-billion surplus in the previous month, bringing the year-to-date figure to USD353-million surplus. 

 

Citing the BSP data, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, in a report on Tuesday, said net payment of the country’s foreign currency-denominated liabilities and wider trade gap partly caused the BOP deficit.

 

“Nevertheless, BOP data could still improve in view of the seasonal increase in OFW (overseas Filipino workers) remittances and conversion to pesos in preparation for the Christmas season, (which is) expected to culminate in December 2021,” he said.

 

He cited other factors for the BOP position are the scheduled fund-raising activities of banks and corporates until January next year, the preparations for the further reopening of the domestic economy, increased borrowings ahead of the expected interest rate increase in the coming months, and hedging before the May 2022 national polls. 

 

Ricafort said these activities “could entail some foreign investment inflows that could be added to the country's BOP and gross international reserves (GIR) on a cash flow perspective.”

 

“Furthermore, BOP data could also improve starting December 2021-January 2022, in view of the expected increase in OFW remittances and inflows of foreign aid/assistance from abroad/international community into the country, particularly for areas hard hit by Typhoon Odette for reconstruction/rebuilding/rehabilitation of damaged homes, businesses, establishments/institutions/facilities, infrastructure, and other properties,” he added. 

 

BOP is a comprehensive account of a country’s total transactions with the rest of the world for a specific period.

 

Monetary authorities have slashed the central bank’s 2021 BOP surplus projection to USD1.6 billion from USD4.1 billion earlier due to expected weaker recovery from advanced economies given the emergence of new coronavirus disease 2019 (Covid-19) variants seen to slow economic recovery. (PNA)