RP's BOP surplus up by 27.5% to $2.73 billion

The country's balance of payments (BOP) surplus went up by almost a third in the first five months of the year, as more foreign exchange flowed in through loans against domestic currency used to pay the country's debts. The country's BOP from January to May 2010 rose by 27.5 percent to $2.73 billion, $590 million more than the same period last year, the central bank said Thursday. The BOP represents the total of a country's international transactions for a certain period, with foreign exchange including incoming foreign loans, remittances, and exports versus debt payments, imports, and other expenditures. In May, the country booked a surplus of $388 million compared with the $55-million deficit posted the same period a year ago, a strong showing despite Europe's continued debt woes, according to the central bank. "The surplus is due to inflows from official loans and BSP operations although there were also outflows to service national government debt payments, these were not enough to offset the aforementioned foreign exchange inflows," Bangko Sentral ng Pilipinas Governor Amando Tetangco said. The BSP has raised its BOP surplus projection for this year to $3.7 billion from $3.2 billion, from last year's $5.3 billion. This would raise the country's gross international reserves (GIR), comprising foreign currencies for imports, debt servicing, and other foreign-exchange expenditure requirements. The BSP sees the GIR to reach between $48 billion and $49 billion, higher than the $47-billion to $48-billion projections for the year. The GIR reached a new record high of $47.65 billion in May 2010 from $39.59 billion in May 2009, which could cover more than nine months of imports of goods, payments of services, and income. It is also equivalent to almost 12 times the country’s short-term external debt based on original maturity and more than five times based on residual maturity falling due in the next 12 months. "Our healthy external position is due in part to the continued surge of overseas Filipino remittances to historic high levels," Tetangco said, stressing that the central bank recently increased its growth forecast for remittances to eight percent from six percent. Money sent home by Overseas Filipino Workers (OFWs) hit $5.87 billion from January to April this year from $5.36 last year because of strong demand for professional and skilled workers abroad. Tetangco said the BSP has been working to lower remittance charges for OFWs through the Philippine Payments and Settlements System (Philpass) Remit System. The BSP said this would charge lower remittance fees starting the third quarter this year, and would result in P100 to P500 in savings. Current charges are between P150 and P550. OFW families are expected to save between P92 million and P922 million for faster and cheaper delivery of remittances at lower rates starting at P50 per transaction. --Nikka Corsino, GMANews.TV