Despite the worsening global economy, the Bangko Sentral ng Pilipinas (BSP) said it had no plans of borrowing from the commercial market this year.
At an economic forum hosted by Security Bank, BSP governor Amando Tetangco said there is no need to tap the market at this time with reserves going up close to $40 billion due to the successful government bond offering in January.
The government issues a $1.5 billion worth of government bonds in January. The proceeds provided a significant boost to the Gross International Reserve early in the year.
The market has been speculating that weekness in foreign exchange inflows this year would compel the BSP to return to the commercial market with the balance of payment falling to an $88 million surplus at the end of 2008.
But the balance of payment surplus bounced back to $1.735 billion in January this year, mainly due to the dollars generated by the government's foreign borrowing.
The country's gross international reserves (GIR) reached $39.6 billion at the end of January, rising by $2 billion from the end-2008 level as government borrowing boosted reserves.
With oil prices drastically down and imports also softening up, the BOP surplus was significantly larger than the January 2007 surplus of $259 million and the second highest surplus level since 2004.
Despite the January surge in the surplus level, however, the BSP still kept a conservative projection for the 2009 BOP surplus, saying that the level was likely to exceed $500 million that was originally projected for 2008 but would stay below the $2.3-billion surplus originally projected for 2009.
Tetangco said the surplus level was not likely to exceed the $2.3-billion originally projected for 2009 but he said the balance of payments (BOP) would prove more resilient this year than 2008.
"The decline in oil prices has been significant and with exports also likely to be softer this year, the BOP surplus could easily better last year's surplus," said Tetangco said
When pressed, Tetangco said the surplus level would exceed $500 million, compared to the $88 million surplus reported by the BSP at the end of 2008.
Tetangco said the BOP surplus would be supported by inflows from the national government's commercial borrowing as well as the proceeds from official development assistance (ODA) that were booked early this year.
But the central bank chief said weakening imports would also ease some pressure on the country's reserves sine global demand was expected to fall even more dramatically this year.
As global consumption slows down, the country's import-dependent exports would also weaken and this would hit the BOP from two opposing sides: on the one hand, there would be less dollar outflows paying for imported components and on the other, there would also be less inflow from exports.