The central bank’s $2 billion balance of payments (BOP) surplus target for this year is within reach, within just a little less than $4 billion more needed to achieve it in the last quarter.
The BOP surplus in September reached $117 million, central bank data released Wednesday showed. Though the figure was less than the $219 million posted a year earlier, this brought the tally for the first nine months of the year to $1.65 billion.
Deposits of the national government and gains from foreign exchange operations of the central bank helped the BOP stay at a surplus, BSP Deputy Governor Diwa Guinigundo said, adding that September was a particularly challenging month as it marked the period when the Fed was seen bolstering its much-watched rates, creating jitters in the market.
The heightened uncertainty unleashed by Fed rate hike speculations, portfolio investments were anemic.
“So even in terms of the inflow of portfolio investment was affected,” Guinigundo told reporters. “We were seeing more and more inflows going into the equities market and the government securities market only to suffer some slowdowns and decline in fact during the month of September because of the uncertainty surrounding the future of policy of the US Fed.”
The tally for the first nine months was lower than the $1.8 billion BOP surplus recorded a year earlier. But with three more months left before the year is over, the central banker said the BOP surplus target for 2016 is achievable, especially since Filipinos working abroad normally sends more money during the last quarter for the holiday season.
“If the current account continues to be in surplus position because of the robustness in the growth of remittances and BPO [business process outsourcing]continues to be strong at 15 percent so far, and portfolio investments and foreign direct investments continue to provide additional growth impulses, then we should be able to see the BOP target of $2 billion for 2016 doable,” Guinigundo said.
Economists from BPI and Moody’s agree that indeed the BOP goal for 2016 is attainable.
“This is mainly because of the improvement in remittances in recent months, which we expect to continue for the remainder of 2016,” Moody’s Analytics economist Jack Chambers said in an e-mail.
Though BPI’s Emilio Neri cautioned against the continued worries about the possible Fed rate hike, and the results of the US elections next month.
“[B]ut there are headwinds that could reduce soften capital flows including uncertainty from the US elections and the much anticipated policy rate increases in the US Federal Reserve’s policy rate,” Neri said in a reply to e-mailed questions.
The BOP summarizes the country’s economic transactions with the rest of the world over a certain period including remittances from Filipinos working abroad, as well as earnings of local BPOs from their clients overseas. It consists of the current account, as well as capital and financial accounts.
The payments surplus last year reached $2.62 billion, reversing the $2.86 billion deficit recorded in 2014.