MANILA, September 24, 2005
 (STAR) The balance of payments (BOP) position in the second quarter of 2005 yielded a surplus of 1.19 million, more than two-and-a-half times the 448 million US dollars posted in the same quarter last year due to a stronger current account, reported the Philippines' central bank Friday.

According to the Bangko Sentral ng Pilipinas, the capital and financial account, while less robust, likewise remained in surplus during the quarter in review. These favorable outcomes continued through the rest of the first semester bringing the six-month BOP surplus to US$2.0 billion.

The above developments led to the increase in the BSP’s gross international reserves (GIR), including reserve position in the IMF to US$17.7 billion as of end-June 2005, up by 9.2 percent from the end-December 2004 level of US$16.2 billion.

At this level, reserves remained adequate and were equivalent to 3.9 months’ worth of imports of goods and payment of services and income (MIGSI).

In terms of debt coverage, the reserve level was 3.2 times the amount of the country’s short-term foreign liabilities based on original maturity and 1.7 times based on residual maturity.

The current account posted a higher surplus of US$386 million in the second quarter of 2005, equivalent to 1.6 percent of GDP, traced largely to the higher surplus in current transfers, due in turn to the continuous growth in workers remittances.

The strong workers remittances combined with the lower deficit in the services account more than offset the contraction in net income receipts and the higher deficit in the trade-in-goods account.

As a result, the current account surplus in the first six months of 2005 rose to US$1,123 million (the equivalent of 2.5 percent of GDP) or a growth of more than 600 percent from the US$152 million surplus for the same period in 2004.

Total export earnings in the second quarter of 2005 aggregated US$9,658 million with growth arising mainly from shipments of electronics and machinery and transport equipment.

Meanwhile, the total import bill was recorded at US$11,839 million, traced to increased purchases of capital goods, mineral fuels & lubricants, and consumer goods.

For the first half of the year, the trade-in-goods deficit widened by 5.0 percent as the 3.8 percent expansion in imports of goods outpaced that of exports at 3.6 percent. The six-month cumulative levels of exports and imports of goods totaled US$18,978 million and US$22,637 million, respectively.

Electronics exports declined marginally in the second quarter of the year to reach US$6,644 million due to the transfer of a major electronics company’s high-end product line (i.e., notebook PCs) to China.

Despite this development, exports of electronics products managed to pull off a 1.2 percent growth for the six-month period on account of exports of semiconductor devices and components which rose by more than 9.7 percent.

On the other hand, imports of capital goods increased by 25.4 percent to US$2,750 million in the second quarter of 2005, an acceleration compared with the 1.3 percent expansion in same quarter a year ago.

The increase was traced to higher purchases of office and EDP machines, land transport equipment, and aircraft, ships and boats. However, the cumulative six-month procurement of capital goods posted a contraction of 5.7 percent to US$4,156 million, owing largely to the decline in purchases of telecommunications equipment, office and EDP machines and power generating and specialized machines.

Similarly, imports of consumer goods reached US$966 million in the second quarter of the year due to higher purchases of both durable and non-durable goods. This brought total consumer goods purchased during the first half of 2005 to US$1,764 million.

Chief News Editor: Sol Jose Vanzi

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