BSP exec sees 'modest' BOP shortfall for '17

MANILA -- A ranking Bangko Sentral ng Pilipinas (BSP) official  remains optimistic of a “modest” shortfall in the country's balance of payment (BOP) position this 2017.

This even as the country’s BOP position in the first nine months of the year stood at a deficit of USD1.37 billion, which is way lower than the central bank’s USD500 million deficit assumption for the year.

Last September alone, BOP posted a USD24 million surplus, ending the deficits in the previous four months.

BOP is the sum of a country’s total transactions with the rest of the world.

BSP Deputy Governor DiwaGuinigundo, in an SMS message, attributed the surplus last September to the gains of central bank’s investment overseas.

He, however, said the impact of central bank’s income from investments abroad is offset by the national government’s debt servicing requirements.

He said “fundamentals are very encouraging”, citing the recovery of exports and deceleration of growth of imports, with the latter being the main factor for the drop in the country’s current account and strong demand for the US currency.

“Cash remittances continue to be robust while BPO (business process outsourcing) revenues have been reported to be resilient at around 10 percent growth,” he said.

“We hope we can keep the BOP shortfall at modest volume given the good outturn in portfolio investment in August and small overhang in September,” he added.

Central bank data showed that registered foreign portfolio investments, otherwise known as hot money due to the speed it comes in and out of an economy, as of the week ending October 6, 2017,  amounted to a net outflow of USD629.77 million, a reversal from the USD1.31 billion net inflow same period last year.

Monetary officials have attributed the outflows to investors’ risk-off attitude given the negative developments overseas and its impact on the domestic economy.

Last September, hot money posted a net inflow of USD112.63 million, a turnaround from the USD807.15 million for same month in 2016.

Total inflows for the month reached USD1.296 billion while total outflows amounted to USD1.184 billion.

Total remittances as of August expanded by 6.4 percent to USD20.72 billion, higher than central bank’s remittance growth assumption of four percent for the year. (PNA)