The government is set to bare better forecasts for the country’s various streams of foreign income amid low fuel prices and stronger investment flows.
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said balance-of-payments (BOP) assumptions, which take into account exports, remittances, foreign investments, and the like, would be revised by the end of this week.
“It’s a substantial adjustment,” Tetangco told reporters on Tuesday.
“The indication is that the projected surplus will be higher than what was originally announced,” he added.
The BOP is an accounting of all the businesses the country does with the rest of the world, expressed in the difference between the money that enters the country and the money that goes out.
Sources of income include remittances from migrant workers, earnings from dollar-earning industries, tourism receipts, export revenues and foreign investments.
Among the types of outflows are divestments by foreigners, cash spent on imported goods and payments for foreign loans.
For 2015, the BSP earlier said it expected a $1-billion surplus, better than last year’s $2.88-billion deficit.
In April alone, the country posted a BOP surplus of $380 million, bringing the four-month total to a surplus of $1.257 billion.
Tetangco said fuel prices would help improve the country’s trade balance, or the difference between imports and exports.
Higher foreign portfolio investments and the continued strength of remittances would also help bolster the income side of the economy’s books.
“There are different components, and there are also downward revisions. But on a net basis, (the surplus) will be higher,” the official said.
Surpluses in the BOP are one indication of the domestic economy’s underlying strength.
Making more money from overseas means the country has a steady supply of foreign exchange, which is needed to allow companies and the government to do business with the rest of the world.
A shortage in the country’s supply of dollars—referred to as a BOP deficit—would force the private and public sectors to buy foreign currencies from overseas.
This would send the local currency crashing, hurting the rest of the economy.
Dollar reserves held by the central bank stand as a last line of defense.
At the end of April, the country’s gross international reserves rose to $80.79 billion, up from $80.46 billion in March.
The country’s reserves were enough to cover 10.6 months worth of imports of goods and services, as well as 4.8 times the nation’s short-term debt based on original maturity.