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BSP upgrades 2005 BoP surplus forecast to $852 M |
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By LEE C. CHIPONGIAN
The Manila Bulletin 05/04/2005 The Bangko Sentral ng Pilipinas adjusted its projected balance of payment (BoP) surplus for the year from $464 million to $852 million. The BSP raised its BoP forecast due to changes in its accounting called "errors and omissions" which they expect would total between $700 million to $800 million from its previous accounting of $1.6 billion. BSP Deputy Governor Amando Tetangco Jr. said expectations of higher overseas Filipino workers’ remittances are the main drivers for the higher BoP position. "There are more inflows from investments and OFW remittances and it is going to be good for the peso because we have more receipts and it will boost dollar reserves," Tetangco said. In the meantime the BSP expects its capital and financial account to close the year at a surplus of $1.2 billion from $1.1 billion. On the other hand gross international reserves or GIR are seen to increase from previous a forecast of $16 billion to $17 billion for 2005. Tetangco said earlier that based on a recent review of targets, the central bank expects portfolio investments to increase to $2.5 billion to $3 billion for 2005 due to improved investor sentiments, influenced largely by fiscal reform efforts and the passage of the new value-added tax law. The BSP official also expects the country’s GIR will improve on the back of higher OFW monies, estimated to reach $10 billion this year. The BoP is a summary of the country’s transactions with the rest of the world and includes exports less imports, net portfolio and equity investments, income and other transfers. The BoP as of March was a surplus of $98 million. Last year the country’s BoP position ended with a deficit of $282 million, however the central bank reported that the BoP recovery in December came from the $177 million surplus posted for the month due to foreign currency inflows. The end-December BoP shortfall was still below the deficit projected by the BSP of $516 million for 2004. The BoP is a closely watched indicator since persistent deficits would erode the country’s dollar reserves. A sharp fall in the country’s dollar hoard would put pressure on the peso and bid up the prices of goods and services sold locally. BoP position improves on increases in the OFW remittances, exports and portfolio investments. On the other hand the GIR is seen as a leading indicator for the country’s ability to repay its maturing debts as well as its trade with the rest of the world. |
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