PHL payments surplus contracts by 92% to $208M in Oct. – BSP

The Philippine balance of payments surplus contracted by 92.4 percent to $208 million in October from $2.736 billion a year earlier, the Bangko Sentral ng Pilipinas reported Friday. While the central bank did not cite a reason for the plunge, BSP Governor Amando Tetangco Jr. earlier noted the ongoing global financial turmoil has not spared the Asia Pacific region. The crisis deepened in May when Greece’s debt rating was downgraded to junk by Moody’s Investor Service in May, followed by another downgrade to near default in September. The US debt crisis that was overshadowed by partisan politics at a time when Europe was trying to find ways out of its sovereign debt crisis also weighed in against global market sentiment. "As uncertainty escalated, risks have intensified. The likely impact would be a break on the growth momentum and short-term fluctuations in the region's capital flows," Tetangco said. Still, the BSP reported Friday that the 10-month payments surplus widened by 8.2 percent to $9.929 billion from $9.179 billion year-on-year. The payments position or BOP is the difference in the amounts of foreign exchange flowing into and out of the country in a particular period, accounting for transactions with the rest of the world. Originally, the BSP expected the country's BOP position posting a surplus of $6.7 billion this year and $4.4 billion next year. Last year, the BOP posted a record surplus of $14.4 billion on the back of strong remittances of overseas Filipinos, high earnings of the business process outsourcing (BPO) sector, sustained export growth as well as surging foreign capital flows. As early as August, the BOP target of $6.7 billion set by the BSP was breached due to strong foreign capital flows to emerging market economies including the Philippines. The country’s payments position has been slowing down in the last few months over the raging euro debt crisis and the sputtering US economy. On Thursday, the Bangko Sentral reported that the net inflow of foreign portfolio investments or "hot money" contracted by 37.4 percent $3.445 billion in the first 10 months from $2.508 billion year-on-year. In October, net inflows were 78.2 percent narrower to $237.44 million from $1.088 billion a year earlier on the bearish sentiments over the Europe’s debt woes. — VS, GMA News