BSP Deputy Governor Diwa Guinigundo said authorities are now reviewing the latest projections for the balance of payments (BOP), gross international reserves (GIR), current account, foreign direct investments, foreign portfolio investments, and remittances from overseas Filipinos, among others. File

BSP reviews external accounts
Lawrence Agcaoili (The Philippine Star) - September 23, 2017 - 4:00pm

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is revising its assumptions on the country’s external payments position to take into consideration recent developments affecting the domestic economy.

BSP Deputy Governor Diwa Guinigundo said authorities are now reviewing the latest projections for the balance of payments (BOP), gross international reserves (GIR), current account, foreign direct investments, foreign portfolio investments, and remittances from overseas Filipinos, among others.

“There are things that we need to look at again the course of revising our projections this month. Probably we will come out with the reassessment of the BOP by the first few weeks of October,” he said.

 He explained the BSP is now updating its latest BOP projections considering the year-to-date data.

Latest data released by the central bank showed the country booked a BOP deficit of $1.39 billion from January to August this year, a complete turnaround from the $1.53 billion surplus recorded in the same period last year.

The shortfall is almost three times the projected $500 million deficit for 2017.

The BSP originally projected a $1 billion BOP surplus this year but the outlook was revised last June.

The BOP shows the summary of the country’s transactions with the rest of the world. Components include trade, foreign direct investments and portfolio investments, and even remittances from Filipinos abroad.

A deficit means it imported more goods, services and capital than it exported. A shortfall indicates more resources left the country than entered.

On the other hand, the country’s current account (CA) position turned negative with a shortfall of $234 million or 0.2 percent of gross domestic product (GDP) in the first half of the year.

The CA position is an important indicator about the economy’s health. It is the sum or the balance of trade in goods and services less imports as well as the net income from abroad and net current transfers.

For 2017, the BSP expects the country to book its first CA deficit in 15 years at $600 million or 0.2 percent of GDP instead of a surplus of $800 million or 0.6 percent of GDP this year.

“It looks like there is a trend for imports to stabilize at present pace but at the same time you have exports recovering in a bigger way. I think the CA position is quite doable,” Guinigundo said.

The BSP expects foreign direct investments (FDIs) to reach a record net inflow of $8 billion this year but inflows only reached $3.6 billion in the first half or 14 percent lower than the $4.18 billion registered in the same period last year.

On the other hand, foreign portfolio investments or hot money yielded a net outflow of $318.88 million from January to August this year a complete reversal of the $1.97 billion net inflow in the same period a year ago amid the geopolitical tension between the US and North Korea, the normalization path taken by the US Federal Reserve, among others.

The BSP has set a $900 million net outflow of hot money this year from a net inflow of $404.43 million last year.

Guinigundo said remittances from overseas Filipinos would perform strongly towards the end of the year as it now exceeds the four percent growth target set by the central bank.

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