BSP Officer-in-Charge (OIC) Alberto Reyes reported that for the first eight months of 2001, the current account yielded a $1.54 billion surplus following continued trade in goods surplus and net income receipts. However, the surplus was lower (by 72.4 percent) than the level realized during the same period last year.
The economic slowdown in the country’s major trading partners pulled down exports receipts by 13.5 percent. Shipments of electronics, accounting for more than half of the country’s exports, fell by 22 percent while exports of garments dipped 2.1 percent. Exports of machinery and transport equipment, however, remained robust, posting a year-to date growth of 8 percent.
OIC Reyes stated that imports of goods slipped by 1.1 percent largely on account of the drop in imports of capital goods as well as imports of mineral fuel and lubricants. Meanwhile, imports of raw materials and intermediate goods exhibited a slight increase.
OIC Reyes, however, noted the continued net inflow of direct investments despite the global economic downturn and the more cautious stance of investors. For the first eight months of the year, net inflows of foreign direct investments amounted to $984 million, albeit lower than the $1.5 billion net inflows last year. Direct investments came mostly from Singapore and the U.S. and were channeled mainly to the telecommunication and manufacturing sectors.
Meanwhile, the net outflow in portfolio investments ($117 million) in August wiped out the surplus position ($37 million) realized from January-July 2001, bringing the year-to-date balance of portfolio investments to a deficit of $80 million. Mainly accounting for the weak performance in portfolio investments was the net repayment on debt securities owed to non-residents ($212 million), which tempered the impact of net investments by foreigners in the local equities market. Net placements in equity securities by non-residents reached $453 million for January-August 2001, in sharp contrast to the $476 million net withdrawal recorded in the same period last year.
On the other hand, the other investments account posted a lower net outflow of $4.673 billion on account of lower net trade receivables and loan repayments.
These developments altogether contributed to the country’s balance of payments deficit of $1.133 billion for the period January-August 2001. This level was a turnaround from last year’s surplus position of $65 million.
The country’s gross international reserves as of end-August 2001 at $14.3 billion, remained adequate. In terms of import cover, the current reserve level was sufficient to cover 4.2 months’ worth of imports of goods and payment of services and income. In terms of adequacy to cover short-term debt, reserves were equivalent to more than twice the level of the country’s short-term external debt based on original maturity, or alternatively 128.3 percent of short-term external debt based on residual maturity.