MANILA, Philippines – The country’s balance of payments dropped to $469 million in February but the surplus for the first two months was higher at $2.204 billion because of higher foreign borrowing by the government.
Timing differences caused the slowdown in the February surplus which was 123 percent lower than the year-ago balance of payments (BOP) surplus of $1.049 billion.
Last year, the government’s foreign borrowing was not recorded in the BOP until February. This year, the government successfully raised $1.5 billion from its global bond issue early in January.
But the two-month surplus was about 68 percent higher this year at $2.204 billion compared with the $1.308-billion surplus over the same period in 2008.
There was a huge outflow of foreign portfolio investments in January but BSP Governor Amando M. Tetangco Jr. explained that the monthly surplus was made possible by inflows from other sources.
Tetangco said the February surplus was due to foreign loans of the National Government from official development assistance (ODA), mainly from the Asian Development Bank (ADB) and the World Bank.
Tetangco said there were also inflows from the foreign exchange operations and investment income of the Bangko Sentral ng Pilipinas (BSP).
But the slowdown in the BOP surplus also reflected the slowdown in the country’s international reserves which only went up by $100 million in February to $39.3 billion.
According to Tetangco, the inflows were only partly offset by payments of maturing foreign exchange obligations of the NG and the BSP.
The BSP has been expecting the GIR to remain sturdy this year, allowing the country to build up a $700-million balance of payments surplus despite the dramatic decline in exports and the slowdown in remittances from overseas Filipinos.
The BSP actually projected that the GIR would reach only $37.5 billion this year, down-scaling its earlier projected level of $39 billion as the growth in remittances grinds to a halt due to job losses abroad
The gross international reserve (GIR) is the sum of all foreign exchange flowing into the country and the balance of payment (BOP) position is the remaining balance net of all external payments for debt servicing and imports.
The BSP said remittances from overseas Filipinos will reach $16.4 billion this year, unchanged from the same level in 2008 — marking the first time that remittances would not expand since the country stated exporting workers.
“There is a very real danger that the global economy would weaken more and the Philippines has to face this,” Tetangco said.- Des Ferriols, Philippine Star