BOP surplus seen at $200M in ’03

The country’s s balance of payments (BOP) is expected to yield a $200-million surplus in 2003 on the back of the expected recovery in the export sector, particularly electronics.

Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura said yesterday that the export sector is expected to sustain its recovery in 2003, after contracting dismally in 2001.

Buenaventura said remittances from overseas Filipino contract workers will also contribute to the bulk of this surplus as the country increased the number of workers deployed abroad, especially in the health care sector.

This year, the BOP surplus is expected to hit $150 million, a complete turnaround from the $192-million deficit recorded in 2001.

Buenaventura said the emerging number is roughly equal to this year’s BOP surplus. "But said this could go up to as high as $200 million depending on the performance of the export sector," he added.

Buenaventura said the government’s debt service expenses are not expected to surge until 2004 due mainly to maturing obligations amounting to $500 million.

For this year, Buenaventura expressed optimism that the $150-million projection would be met, as the BOP surplus hit $1.889 billion during the first five months of the year after going down in May as the government paid off some of its maturing obligations.

Behind this strength was the recovery of the export sector and the continued strong inflow of dollar remittances from overseas contract workers.

During the first five months of the year alone, total exports amounted to $13.425 billion, representing a 3.1-percent increase from a year ago.

Buenaventura said the export sector grew by 13.8 percent in May alone, posting a double-digit growth rate for the second consecutive months.

Buenaventura said the upturn in exports was due to sustained increase in the export of machinery and transport equipment, processed food and beverages and sugar.

Specifically, the BSP chief said electronics export continued to rise, growing by 23.1 percent in May.

As a result, the January to May electronics exports grew by 2.2 percent and reversed last year’s contraction.

"There was increased demand from Asian markets particularly Taiwan, China, Korea, Malaysia and Hongkong," Buenaventura said, adding that the exports to these markets compensated for the lower demand from the US and Japan, the country’s traditional export destinations.

Imports, on the other hand, tapered off in May and grew by only 3.9 percent after peaking at 18.8 percent in April. Imports for the first five months of the year reached $12.547 billion, up by 3.2 percent from a year ago.

Buenaventura said these figures reflected the replenishment and inventory build-up as manufacturers expect a more robust domestic demand.

The BSP report also indicated that OFW remittances continued to be the main factor behind the two-fold increase in the income account. Net receipts reached $2.526 billion, more than double last year’s $1.236 billion.

OFW remittances accounted for about 90 percent of gross income receipts and expanded by 45.3 percent to $3.618 billion during the five-month period, up from only $2.493 billion in the same period last year.

The BSP said the increase in remittances came from the 3.8-percent increase in the number of new contract workers deployed abroad.