Bangko Sentral posts higher deficit due to rising import costs


By Lara Climaco | FilAm Star Correspondent

Rising import costs has prompted the Bangko Sentral ng Pilipinas (BSP) to adjust its balance of payments (BOP) forecast for 2018.

“The over-all BOP position for 2018 is seen to post a higher deficit of US$1.5 billion from the earlier projection of US$1 billion. This is equivalent to just -0.4 percent of GDP, a very manageable external payments position,” the BSP said in a statement issued June 14.

“Consistent with the revised BOP projection, the year-end gross international reserves (GIR) position is anticipated to settle at around US$80 billion. The GIR level remains ample, covering more than seven months’ worth of imports of goods and payments of services and income,” it added.

The current account deficit is seen to reach US$3.1 billion for the year, or equivalent to 0.9 percent of GDP as imports outpace export receipts. The BSP has raised the growth forecast for imports to 11 percent while that for exports, to 10 percent. In December last year, these projections stood at 10 percent and 9 percent, respectively.

“The current account will continue to draw support from the steady inflows of overseas Filipino remittances as well as business process outsourcing (BPO) and tourism receipts,” the BSP said in the statement.

During the first quarter, export revenues in BPO services grew by 7.5 percent to US$5.5 billion from the comparative year-ago level. On the other hand, net payments for travel services declined by 41.5 percent because “the growth in travel exports at 51.4 percent outpaced that of travel imports at 4.2 percent,” according to the first quarter BOP report of BSP’s Department of Economic Statistics.

Meanwhile, remittances posted growth at 1.3 percent during this year’s first quarter to US$7.8 billion. Latest BSP data show that a 12.9 percent surge in April placed the four-month growth at 4 percent, with remittances already hitting $10.43 billion.

Despite a healthier current account deficit in the first quarter or more income from the exports of goods and services, a huge surge of outflows in the financial accounts — particularly in the net loan repayments made by local banks and private corporations — led to a higher deficit in the country’s BOP position for the first quarter, additional BSP data also show.

The BOP deficit stood at US$1.2 billion during the first three months of the year, a reversal of the US$505 million surplus recorded in the fourth quarter of 2017 and 20 percent higher than the comparative year-ago level.

“Net outflows in the financial account surged to US$1.5 billion from US$328 million in Q1 2017 as other investments reversed to net outflows from net inflows last year, stemming largely from residents’ net repayment of loans,” the BSP’s Department of Economic Statistics reported.

Details on the financial accounts showed that net loan repayments made by local banks amounted to $1.8 billion while those by other private corporations reached US$806 million.

The BSP remains confident of higher net inflow of foreign direct investments (FDI) for the entire year.

“Net inflows of FDI in 2018 are projected to reach US$9.2 billion, driven primarily by the sustained positive developments in the domestic economy, expected improvement in global economic conditions relative to 2017 as well as the implementation of public-private partnership projects that were approved/awarded in the previous years, when most projects started,” it said in the statement.

“FDI uptick is further seen in 2018 in line with the continued fast tracking and modernization of the country’s soft and hard infrastructure, growing interest from non-traditional investment sources, and improved global perception of the Philippines as an investment destination,” the BSP concluded.