MANILA – Remittances from overseas Filipino workers (OFWs) are expected to partly boost the country’s balance of payment (BOP) position in the coming months after the latter reversed into surplus last July following the deficits in the previous two months.
The Bangko Sentral ng Pilipinas (BSP) reported on Wednesday a $642-million BOP surplus in the seventh month this year, better than the previous month’s $312 million deficit and $8 million surplus a year ago.
In a report, economist Michael Ricafort said receipts from the business process outsourcing (BPO) sector, foreign investments, and other structural United States dollar inflows are also expected to improve the country’s BOP position.
“The CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) law has supported the stronger FDI (foreign direct investments) data recently that could continue in the coming months, thereby could add to the BOP and GIR (gross international reserves) data,” he added.
The BOP is the statement of a country’s total transactions with the rest of the world at a particular time.
Ricafort noted that the developments in the country’s vaccination program against coronavirus disease 2019 and the arrival of more vaccines are also seen to help lift investors’ confidence because these will support the continued reopening of the economy.
“Still near-record high GIR may also further strengthen the country’s external position, which in turn, fundamentally supports the country’s relatively favorable credit ratings as seen recently,” he emphasized.
BSP data showed that as of end-July this year, the country’s foreign reserve reached $107.15 billion, equivalent to 12.2 months’ worth of import of goods and payment of services and primary income.
The international minimum threshold for GIR is three months’ worth of import cover.(PNA)
