The Bangko Sentral ng Pilipinas said Wednesday that the country’s balance of payments (BOP) was expected to post a surplus of $6.8 billion this year, higher than the earlier projection of $2.7 billion.
The expected surge in the BOP surplus will be brought about by the robust inflows of remittances, foreign portfolio funds and foreign direct investments, particularly in the services sector, according to the BSP.
The BSP’s new projection was based on the latest date on dollar inflows.
“We now expect our BOP to register a much higher surplus this year,” BSP Deputy Governor Diwa Guinigundo told reporters after the meeting of the interagency Development Budget Coordination Committee (DBCC).
BOP, a record of the country’s commercial transactions with the rest of the world, shows the difference between the inflows and outflows of dollars to and from the country.
A surplus in the BOP boosts the country’s total reserves of foreign exchange, or gross international reserves (GIR), which currently stand at about $82 billion.
The upward revision in the BOP projection was made despite the cut in the government’s export forecast. Export receipts were among the key components of the BOP.
The Development Budget Coordination Committee (DBCC), an interagency unit that sets economic policies and targets of the government, said the country’s export earnings were seen to post a year-on-year growth of 7 percent, lower than the original forecast of 10 percent.
The central bank believes that the dampening impact of weaker exports on the BOP surplus can be offset by the higher inflows of remittances and foreign investments. Investments are mostly in the form of portfolio funds and capital infused into the country’s business process outsourcing (BPO) sector.
Net inflows of foreign direct investments are seen hitting $1.5 billion this year (up from the previous forecast of $1.2 billion), the bulk of which went to the BPO sector.
For 2013, however, the central bank expects the BOP surplus to slide to $3 billion.
Guinigundo said the lower forecast for next year took into account expectations that local companies would import more goods next year.
“Imports are expected to start going up significantly next year,” Guinigundo said.