MANILA, Philippines - The country’s balance of payments (BOP) ended in a surplus of $8.9 billion last year, surpassing official forecast, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.
“The country’s BOP position has been in surplus for a record eight years,” Tetangco said in a statement yesterday during a breakfast meeting in Mandaluyong.
His statement came ahead of the official release of 2012 BOP data on Friday. The latest figure is down from $10.179 billion in surplus posted in 2011, but beat the revised $6.8-billion outlook last year.
The BOP summarizes total inflow against total outflow of capital within a given period in a particular economy. A surplus indicates the country has enough resources to meet its trade obligations and pay external debts.
The BOP consists of two segments, the current and capital accounts. Current accounts pertain to inflows in the form of export and tourism receipts, remittances from overseas Filipinos and earnings of business process outsourcing (BPO) sector.
Capital accounts, on the other hand, refer to portfolio inflows in the stock and bond markets as well as long-term foreign direct investments. The BSP chief said “structural” current account inflows accounted for the bulk of BOP surplus.
This, in turn, has resulted into more demand for pesos, contributing to the currency’s recent appreciation against the dollar. A strong peso, which opened at 40.60 against the greenback yesterday, trims the value of dollar earnings and remittances.
“A steady stream of overseas remittances and robust receipts from BPO and other service exports continue to contribute to the country’s resilient external payments position,” Tetangco explained.
“If flows are structural in nature… we can accommodate some appreciation of the foreign exchange as a result of that,” he added.
For this year, the central bank expects BOP surplus to narrow down to $3 billion, aided by continued capital flows as investors remain bullish of the economy’s prospects.
“With continued market expectations of investment-grade status, we could continue to see more foreign capital coming into our financial markets this year,” Tetangco explained.