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January 2000 BOP Yields $306 Million Deficit


The country’s balance of payments for January 2000 showed  a deficit of $306 million, a reversal of the $878 million surplus in January last year. This was on account of the lower surplus in the current account and the net outflow in the capital and financial account.          

Imports posted a strong 13.0 percent growth during the month, heralding briskier economic production ahead.  Increases were noted in purchases of capital goods, raw materials and intermediate goods, as well as mineral fuels and lubricants. Capital goods which comprised 44.0 percent of the total import bill expanded strongly by 16.2 percent while raw materials and intermediate goods rose by 4.8 percent. Likewise, mineral fuels and lubricants showed a significant increase following the 79.9 percent rise in imports of crude petroleum due to the hike in its average unit price. Merchandise exports continued to grow by 5.8 percent in January, on the strength mainly of machinery and transport equipment as well as garments. There was a slight slowdown in electronic exports which continued to be the country’s top export earner. Industry sources believe that this development constitutes a mere blip as fears over possible Y2K glitches waned.  With import growth outpacing export growth, a lower trade in goods surplus was realized during the month.           

The capital and financial account yielded a net outflow of $120 million, a reversal of the $1,190 million surplus posted in January last year.  This could be traced to the net outflow in portfolio investment and the decline in direct investment inflows partly as investors have adopted a wait-and-see attitude pending the passage of key structural reform measures.            

Starting with the January 2000 BOP, the BSP will be presenting BOP statistics in accordance with the IMF’s Balance of Payments Manual, 5th edition (BPM5).  A parallel run of the old format will still be provided until the March 2000 BOP to allow users to relate the old format to the new one. 

  With the adoption of the BPM5, exports and imports in the BOP will deviate from the published foreign trade statistics of the National Statistics Office (NSO) because of the differing concepts between the two.  NSO statistics capture all goods that passed through the customs frontier while BPM5 covers shipment goods that involve a change in ownership.  The BPM5 treatment will bring about a full reconciliation with the trade in goods account in the system of national accounts.  

The BPM5 format now highlights an “income” sub-account, which was formerly lumped with the services group. The income account reflects the net earnings from the use of factors of production (labor, land and financial capital). Meanwhile, in the financial account, transactions in foreign assets are distinguished from transactions in foreign liabilities while transactors are classified into main resident institutions such as monetary authorities, banks, general government and other sectors.  Net transactions in assets represent placements less withdrawals of residents’ investment abroad. Net transactions in liabilities are equivalent to placements less withdrawals of non-residents’ investment in the Philippines. The balance of the financial account is equivalent to non-residents’ investment in the Philippines less residents’ investment abroad. 

Finally, the BOP position under the BPM5 results from the change in the net international reserves (NIR) that is purely due to economic transactions, excluding the effects of revaluation of reserve assets, gold monetization and SDR allocation. Past BOP series reflected a BOP position that included all factors contributing to the change in NIR.

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