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January-September 2001 Current Account Yielded $2.113 Billion Surplus

12.19.2001

BSP Governor Rafael Buenaventura reported today that the current account continued to be in surplus at $2.113 billion for the first nine months of 2001. This was brought about by a sustained surplus in the trade-in-goods account and net inflows of income. However, the current account surplus was 65.5 percent lower than the year-ago level.

The trade-in-goods surplus weakened as the decline in exports of goods outpaced that of imports. Exports receipts contracted by 14.7 percent following the slowdown in demand from the country’s major trading partners. Electronics, which accounted for more than half of the country’s exports, fell by 23.3 percent while exports of garments dipped by 4.4 percent. Exports of machinery and transport equipment, however, remained robust, posting a year-to-date growth of 5.8 percent. Electronics, garments and machinery and transport equipment remained the country’s major exports.

Governor Buenaventura added that, during the review period, imports of goods fell by 2.9 percent. Imports of all commodity groups contracted with imports of capital goods as well as of mineral fuel and lubricants posting the biggest declines of 4.9 percent and 4.6 percent, respectively.

He noted, however, that there had been continued net inflows of direct investments into the country despite the global economic downturn and the more cautious stance of investors. For the first nine months of the year, net inflows of foreign direct investments amounted to $1.3 billion, albeit lower than the $1.7 billion net inflows last year. Direct investments came mostly from and the U.S., France and Singapore, and were channeled mainly to the manufacturing and telecommunication sectors as well as to financial institutions.

Meanwhile, the $516 million net inflow in September reversed the year-to date balance of the portfolio investments account to a surplus of $318 million. This level was four times more than the net inflow of $73 million recorded last year. The September net inflow was largely due to the divestment by residents of their holdings of foreign-issued debt securities. Meanwhile, non-residents’ net placements in local equities for the first nine months of $494 million were in sharp contrast to the $408 million net withdrawal recorded in the same period a year ago.

On the other hand, the other investments account posted a reduced net outflow of $4.613 billion on account mainly of lower net trade receivables and net loan availments mainly of the private sector to finance telecommunication and power projects.

These developments altogether contributed to a balance of payments deficit of $1.308 billion for the first three quarters of 2001. This level was significantly higher than the year-ago deficit of $532 million.

As of end-September 2001, the level of gross international reserves remained comfortable at $14.5 billion. In terms of import cover, the current reserve level was adequate to cover 4.3 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 127.6 percent of short-term external debt based on residual maturity.

January-September 2001 Current Account Yielded $2.113 Billion Surplus

BSP Governor Rafael Buenaventura reported today that the current account continued to be in surplus at $2.113 billion for the first nine months of 2001. This was brought about by a sustained surplus in the trade-in-goods account and net inflows of income. However, the current account surplus was 65.5 percent lower than the year-ago level.

The trade-in-goods surplus weakened as the decline in exports of goods outpaced that of imports. Exports receipts contracted by 14.7 percent following the slowdown in demand from the country’s major trading partners. Electronics, which accounted for more than half of the country’s exports, fell by 23.3 percent while exports of garments dipped by 4.4 percent. Exports of machinery and transport equipment, however, remained robust, posting a year-to-date growth of 5.8 percent. Electronics, garments and machinery and transport equipment remained the country’s major exports.

Governor Buenaventura added that, during the review period, imports of goods fell by 2.9 percent. Imports of all commodity groups contracted with imports of capital goods as well as of mineral fuel and lubricants posting the biggest declines of 4.9 percent and 4.6 percent, respectively.

He noted, however, that there had been continued net inflows of direct investments into the country despite the global economic downturn and the more cautious stance of investors. For the first nine months of the year, net inflows of foreign direct investments amounted to $1.3 billion, albeit lower than the $1.7 billion net inflows last year. Direct investments came mostly from and the U.S., France and Singapore, and were channeled mainly to the manufacturing and telecommunication sectors as well as to financial institutions.

Meanwhile, the $516 million net inflow in September reversed the year-to date balance of the portfolio investments account to a surplus of $318 million. This level was four times more than the net inflow of $73 million recorded last year. The September net inflow was largely due to the divestment by residents of their holdings of foreign-issued debt securities. Meanwhile, non-residents’ net placements in local equities for the first nine months of $494 million were in sharp contrast to the $408 million net withdrawal recorded in the same period a year ago.

On the other hand, the other investments account posted a reduced net outflow of $4.613 billion on account mainly of lower net trade receivables and net loan availments mainly of the private sector to finance telecommunication and power projects.

These developments altogether contributed to a balance of payments deficit of $1.308 billion for the first three quarters of 2001. This level was significantly higher than the year-ago deficit of $532 million.

As of end-September 2001, the level of gross international reserves remained comfortable at $14.5 billion. In terms of import cover, the current reserve level was adequate to cover 4.3 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 127.6 percent of short-term external debt based on residual maturity.

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