Phl posts $114-M BOP surplus in August

MANILA, Philippines -  The country enjoyed a BOP surplus of $114 million in August, lower than the $501 million in July but a reversal of the $318-million deficit in the same period last year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

“This is due to payments (made) by the National Government for maturing debt obligations... (and) the other reason is the continuing deficit in the foreign portfolio investments,” BSP Deputy Governor Diwa C. Guinigundo said.

The BOP is a summary of a country’s economic transactions with the rest of the world.

In the first eight months of the year, the BOP incurred a deficit of $3.53 billion, a reversal of the $3.359-billion surplus in the same period last year.

Guinigundo attributed the deficit during the eight-month period to market volatility following the US Federal Reserve’s cut in its massive monthly asset purchases which was announced in December last year.

“We suffered significant outflows of capital in the last quarter of the year moving on to the first quarter of the year,” Guinigundo said. In January alone, the country saw a $4.48-billion deficit due to the US Fed’s decision to cut its purchases.

 “But we do expect that by the end of the year, we should be able to recover fully from the initial reaction of the market from the possible normalization of the US policy,” Guinigundo said.

The central bank expects a surplus of $1.1 billion for the entire 2014.

Guinigundo said this goal will be reviewed next month as part of the BSP’s biannual reassessment of BOP assumptions.

He said the country’s external payments position is not seen taking a hit following the central bank’s recent monetary policy actions, including raising the key policy rates by 50 basis points.

“We do not see any significant or immediate impact of those policy actions on the external payments position... it’s not so much that we wanted to protect the external payments position by those policy actions, they continue to improve and recover from the difficult situation that we sustained in 2014,” Guinigundo said.

Aside from increasing policy rates to keep inflation expectations anchored, the BSP has also hiked the reserve requirement ratio and the Special Deposit Account rate to pull down the high liquidity growth.

 “Those actions by the Monetary Board were also driven by its very careful consideration on its possible impact on growth... The board though the economy is strong enough to override this tightening so the overall concern is that for prices to remain stable,” Guinigundo said.