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By Maricel E. Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP) cut its
forecast for the country’s balance of payments (BOP) surplus this
year due to uncertainties in the global market.
BSP Gov. Amando M. Tetangco Jr. said the country
would likely end the year with a surplus of $2.5 billion this year,
lower than the earlier forecast of $3.4 billion.
The new forecast is significantly lower than the
record high $8.6 billion surplus last year.
Tetangco said the central bank is reviewing its
BOP projection to take into account latest developments in the
global economy and financial markets.
Earlier, the BSP said the country’s BOP
surplus reached $2.134 billion in the first four months this year.
The BOP summarizes a country’s economic
transactions with the rest of the world and includes its external
trade in goods and services, net investments both direct and
portfolio, and other transfer payments. A surplus arises when the
country earns more foreign exchange than it gives up, and helps to
boost its dollar reserves, an increase in which boosts the local
currency and tempers domestic price increases.
The global credit squeeze triggered by the US
sub prime mortgage crisis is seen to have reduced the demand for
exports as well as the investment appetite for peso-denominated
financial assets.
Also contributing to the slowdown in foreign
exchange inflows is the government’s decision to cut down on
foreign borrowings to ease the peso’s appreciation and help
overseas Filipino workers and exporters preserve their earnings.
At end-April, the country’s gross
international reserves stood at $36.7 billion.
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