BOP back to surplus in April

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BSP to raise 2015 surplus projection

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THE Philippines’ balance of payments (BOP) swung back to a surplus in April from a deficit the preceding month, boosted by higher foreign currency deposits by the government and the central bank’s income from its investment abroad.

Having factored in the impact of the surplus, the Bangko Sentral ng Pilipinas (BSP) said it would raise its forecast for the BOP surplus in 2015 from the $1 billion previously announced. It did not give a figure for its new projection pending further assessment.

Data released by the BSP on Tuesday showed the country’s balance of payments yielded a surplus of $380 million in April, a turnaround from the $244 million deficit recorded in March.

The April surplus also reversed a $19 million deficit posted a year earlier.

Cumulative figures for the first four months of the year showed a surplus of $1.25 billion, reversing the $4.49 billion deficit recorded in the same period last year.

The BSP traced the April payments surplus to inflows of foreign currency deposits of the national government and income by the central bank from its investments abroad. The inflows, however, were partially offset by the country’s payments of maturing foreign exchange obligations, it said.

BSP Governor Amando Tetangco Jr. said the central bank is set to release this week a new forecast for the payments balance surplus this year.

“What we did is, we really looked at the actual performance of the BOP so far, and also the changes in the assumptions following the consideration of the actual developments,” Tetangco told reporters.

The amount will be higher than the $1-billion originally announced for the expected surplus for 2015, the BSP governor said.

Tetangco said the central bank took note of the impact of low oil prices, positive developments in the capital account, net inflows seen in foreign portfolio investments and foreign direct investments on the overall payments balance.

“The effect of all of these is that the overall BOP will be a bigger surplus. There will be a substantial upward adjustment [in the forecast],” he said.

Given strong overseas remittances from Filipino workers overseas, growing business process outsourcing income and lower crude oil prices, there is no reason for the country not to generate a monthly BOP surplus of at least $700 million, Victor Abola, economist at the University of Asia and the Pacific, said when asked for a comment on the latest data.

Consisting of the current account, capital account, and the financial account, the BOP last year resulted in a deficit of $2.88 billion, reversing a payments surplus of $5.09 billion from 2013.

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