The central bank remains confident that the country’s balance of payments (BOP) position will revert to a surplus this year despite the deficit recorded in the first quarter, although it hinted the BOP target for this year may be revised.
“The BOP deficit continued to show the effects of the capital outflows that we experienced in the first two months of 2014,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said on the sidelines of the Manila launch of the Asian Development Bank’s “Asian Economic Integration Monitor.”
“Even as exports continue to recover, remittances continue to remain strong, tourism receipts continue to be robust and BPO [business process outsourcing]revenues continue to increase,” Guinigundo said.
The BOP stood at deficit of $336 million in March, resulting in a cumulative BOP deficit of $4.47 billion for the first three months of the year, a sharp swing from the $1.54 billion surplus recorded for the same period a year earlier.
Guinigundo said that normally, the country’s BOP reverses into deficit in the first quarter of the year but he added that as far as the current account is concerned, the country’s payments position remains strong.
“Yes, I think so [the BOP position will swing back to a surplus]considering that our current account—trade, services, remittances, BPO, tourism—continue to improve,” he said.
However, the BSP official said the central bank is currently reviewing its target of a $3-billion BOP surplus this year.
The BOP summarizes the country’s economic transactions with the rest of the world over a certain period. It consists of the current account, the capital account, and the financial account. A surplus arises when inflows are greater than outflows, while a deficit is incurred when foreign exchange outflows exceed the inflows and causes a drop in the country’s gross international reserves.