Payments surplus nears $8b The country’s balance of payments position swung to a surplus of $1.19 billion in October on the back of steady remittances and heavy investment flows, bringing the year-to-date surplus to a record high of $7.85 billion.
“The BoP has continued to register a strong surplus as a result of sustained foreign exchange inflows coming from overseas Filipinos’ remittances, merchandise exports, net inflows of foreign direct and portfolio investments and investment income of the central bank,” Bangko Sentral ng Pilipinas Gov. Amando Tetangco Jr. said in a mobile phone text message to reporters.
The BoP is a record of the country’s transactions with the rest of the world, including exports, imports, loans, investments, debt servicing and remittances. A surplus means more dollars were plowed into the economy than what went out.
The BoP surplus is expected to increase further with maturing obligations amounting to less than $420 million until the end of the year and remittances expected to exceed $2 billion in the next two months.
The huge surplus in the BoP has enabled the central bank to beef up its reserves to an all-time high of $32.4 billion at the end of October.
The central bank raised its forecast on the BoP surplus in August to $6.3 billion. Central bank officials said the surplus would now clearly exceed $7 billion. The payments surplus may fall in 2008, however, as the central bank expects growth in remittances to slow.
The payments surplus this year has resulted in a stronger peso, which in turn has helped contain inflation.
The central bank cut its key policy rates by 25 basis points Thursday due to a benign inflation outlook and manageable risks.
Money sent home to the Philippines by millions of Filipinos working abroad surged 15 percent to $10.5 billion in the nine months to September, the central bank said Thursday.
September remittances grew 12.4 percent from a year earlier to $1.1 billion, the 17th straight month that the transfers topped the billion-dollar mark, the bank said in a statement.
“Remittances have remained strong as local banks continued to provide expanded banking services to remitters and their beneficiaries, encouraging the use of formal channels of remittance transfer,” the statement said.
It said local banks have been increasing the number of remittance centers abroad and establishing tie-ups with foreign financial institutions to “better respond to the needs of overseas workers.”
Worker remittances from the eight million Filipino workers overseas are one of the country’s main sources of foreign exchange.
One in 10 Filipinos work overseas, and the funds they send home helped the economy grow at the fastest pace in two decades in the second quarter by buoying consumer spending.
Source: Manila Standard