, April 19, 2005
 (STAR) By Des Ferriols  -  After a surge in foreign exchange inflows last February, the countryís balance of payments (BOP) went down to $98 million in March, bringing the year-to-date level to a surplus of $783 million.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the first quarter BOP surplus improved from $685 million in the first two months, performing better than expected.

The monthly surplus was bigger in February due to the one-time deposit made by the National Government, representing the proceeds of its $1.5-billion bond float in January.

In March, the BSP said the BOP surplus was $98 million, reflecting both current and capital account inflows, particularly remittances from overseas Filipino workers (OFWs) and portfolio investments.

BSP deputy governor Amando Tetangco told reporters that the foreign exchange sources performed better than expected so far this year. "Exports also increased cumulatively in the first two months."

Despite payments made by the government to service its foreign debts, the countryís gross international reserves (GIR) remained steady at $16.531 billion as of end-March.

The March GIR inched up slightly from $16.530 billion as of end-February mainly due to inflows from the stateís foreign exchange operations as well as income from investments abroad.

Tetangco said the March GIR level is good for about 3.7 months worth of imports of goods and payments of services and income and equivalent to 3.5 times the countryís short-term debt based on original maturity.

Tetangco said inflows from the BSPís foreign exchange operations helped mitigate the foreign exchange requirements for repayments of the National Government and the BSP maturities.

Short-term debt based on residual maturity refers to outstanding short-term external debt on original maturity plus principal payments on medium and long-term loans of the public and private sectors falling due within the next 12 months.

As long as the GIR could cover these obligations, the country would be comfortably out of the default zone.

On the other hand, BSP assistant governor Diwa Guinigundo said that despite the surges in oil prices, the impact on the overall BOP was minimal.

Oil importers have to buy dollars that come out of the GIR but Guinigundo said the demand has so far been relatively tame.

"The draw is not so big and the impact on the BOP is small given the same import volume," he said.

Guinigundo added the country also exports oil derivatives so that part of the drawdown was offset in terms of export earnings.

"Our import bill is between $3 billion to $4 billion but exports are increasing and there is also a huge kick from OFW remittances," Guinigundo said. "Capital flows are also very strong for both equity and portfolio investments."

The BSP is projecting that the countryís BOP surplus would be lower than expected as the BSP reviewed the investment accounts in the BOP for the whole of 2005.

The BSPís BOP projection for 2005 was based on the estimated inflow of investments, OFW remittances, and borrowings of the government for the refinancing of its maturing foreign currency-denominated obligations.

Reported by: Sol Jose Vanzi

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