The BOP surplus can be traced largely to the national government’s huge foreign borrowings this year and the higher forecast stems from the BSP’s latest projections that show a higher fall in imports and a smaller decline in remittances from overseas Filipino workers.
“Against a backdrop of a global economy showing signs of recovery but remaining susceptible to setbacks and a domestic economy slowly lifting its way of containment measures, the BSP sees the overall BOP position to post a surplus of $8.1 billion,” the central bank said in a statement.
The $8.1-billion BOP surplus is higher than the $600 million surplus it had forecast earlier as it now expects the current account to swing to a surplus of $ 6 billion from an initial expectation of a $1.9-billion deficit. The BSP sees a BOP surplus of $3.4 billion in 2021. The surplus in the current account, which includes trade in goods and services, is due to a big fall in imports.
The BSP earlier kept its expectation of a 16% drop in exports of goods this year but it now expects imports to plunge by 20%.
In addition, the BSP sees a bigger decline in service exports at 17% from 13%, and an even bigger retreat in service imports to 19% from 8.3%.
The BSP sees remittances from Filipino workers declining by only 2% this year, an improvement over the 5% fall it was expecting in May.
The BSP also sees a lower deficit in the financial account at $700 million from the May projection of a $1.2-billion deficit buoyed by an improved forecast on foreign direct investments that is now expected at $5.6 billion from $4.1 billion.
The BSP, however, did not provide the forecast on capital accounts that should include official development assistance funds and other foreign borrowings.
The national government has been relying on debt to finance its budget since the pandemic began.
Finance Secretary Carlos Dominguez III admitted that foreign borrowings since the pandemic began have climbed to a peak of almost $10 billion. (Eileen Mencias)