Phl posts $2.043-B BOP surplus in Jan

MANILA, Philippines - The country’s balance of payments (BOP) posted a surplus of  $2.043 billion in January, nearly 70 percent of the official forecast for the year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Last month’s figure was more than double the $864 million surplus posted in the same period in 2012, central bank data showed. A surplus indicates the country has more than enough resources to meet its external obligations.

BSP Governor Amando Tetangco Jr., in a text message, said last month’s BOP result was “supported by foreign exchange operations and income from investments abroad of the BSP.”

The BOP is a summary of all transactions made by a country over a certain time period. It has two components, the current and capital accounts.

Current account pertains to earnings from the trade sector such as exports and other structural inflows like remittances, tourism receipts and earnings from the business process outsourcing sector.

Capital account, on the other hand, computes inflows and outflows from foreign direct investments – both from private and public sectors – and portfolio investments channeled mostly to local financial markets.

With this year’s forecast about to be met, Tetangco said monetary officials will “revisit” its projections “shortly.” Normally, the central bank conducts a review of its forecasts on April and November of each year.

“When the 2013 projections were made in late 2012, the expectation was that, among others, the country will have a larger trade deficit as imports will recover, in line with a recovery of the export market,” he explained.

This is on the back of expected recoveries in the United States and Europe, he said, pointing out there could be “some easing in the capital inflows” if both are sustained.

The Philippines has enjoyed strong investor sentiment, characterized by strong capital flows, which allowed its local financial markets to reach new highs.

“We will be watchful of developments and employ appropriate macroprudential tools to address any financial stability pressures that could result from further surges in capital flows,” Tetangco said.