January balance of payments posts $1.74-billion surplus

MANILA, Philippines – The Philippines recorded a balance of payments (BOP) surplus of $1.74 billion in January, recovering from a deficit of a revised $275 million in December with proceeds from a $1.5 billion global bond, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The overall BOP surplus in 2008 fell to a four-year low of $89 million after a record $8.58 billion in 2007.

With oil prices drastically down and imports also softening up, the latest BOP surplus figure was significantly larger than the January 2007 surplus of $259 million and the second highest surplus level since 2004.

The BSP said the sharp increase resulted from deposits made by the National Government which completed various foreign borrowing activities at the end of December last year and early January.

The BSP said the NG deposited the proceeds from the 10-year global bonds and another significant deposit was made by the Power Sector Assets and Liabilities Management Corp. (PSALM).

PSALM deposited the proceeds from the privatization of the National Transmission Corp. (TransCo).

According to the BSP, there were also inflows from the BSP’s foreign exchange operations and income from its investments abroad. 

“These inflows were partly offset by payment of maturing foreign exchange obligations of the NG,” the BSP said.

Despite the January surge in the surplus level, however, the BSP still kept a conservative projection for the 2009 BOP surplus, saying that the level is likely to exceed $500 million that was originally projected for 2008.

BSP Governor Amando M. Tetangco Jr. said the surplus level is not likely to exceed the $2.3-billion originally projected for 2009 but said the BOP would prove more resilient this year than 2008.

“The decline in oil prices has been significant and with exports also likely to be softer this year, the BOP surplus could easily better last year’s surplus,” Tetangco said.

Tetangco said the BOP surplus would be supported by inflows from the National Government’s commercial borrowing as well as the proceeds from official development assistance (ODA) that were booked early this year.

But the central bank chief said weakening imports would also ease some pressure on the country’s reserves since global demand was expected to fall even more dramatically this year.–Des Ferriols, Philippine Star