AFP FILE PHOTO
MANILA, Philippines–Money earned by the country from overseas continued to dwindle in October as volatility in financial markets drove cash to other more stable markets, triggering a review of projections by economic managers.
Documents released by the Bangko Sentral ng Pilipinas (BSP) showed the country’s balance of payments (BOP) surplus at $24 million for October, or the worst since the $24-million deficit in June.
The central bank said it was finalizing a new forecast for 2014, with the BOP position now likely to fall short of the projection that was cast in June. At the end of October, the country’s BOP position stayed at a deficit of $3.41 billion versus a projected surplus of $1 billion.
“We are reviewing the full-year BOP numbers to take the latest available info into account,” BSP Governor Amando M. Tetangco Jr. said.
The BOP position is a summary of all transactions between the Philippines and the rest of the world. BOP surpluses indicate the country’s ability to maintain a healthy supply of foreign exchange, which the government and businesses need to do business with the rest of the world.
Surpluses also allow the BSP to preserve and even build up its foreign exchange reserves, which serve as the country’s main line of defense against external shocks that may lead to a BOP crisis.
On the income side, the central bank counts remittances from migrant workers, dollar income from remittances and various industries like outsourcing and tourism and export receipts. Investments and proceeds from foreign loans are also counted as income.
The BSP traced the marginal surplus in October to foreign exchange deposits by the national government and income from the central bank’s overseas investments.
BOP surpluses also allow the central bank to stock up on dollars in the form of foreign exchange reserves, which totaled $79.3 billion at the end of October. Monetary authorities can draw from these reserves if needed by the economy.