The country’s balance of payments (BOP) for January-May 2000 yielded an overall surplus of $397 million. While the capital and financial account registered a deficit of $369 million, the current account continued to post a hefty surplus of $2,449 million due largely to the 69 percent improvement in the trade in goods balance.
Exports of goods grew by 10.3 percent during the first five months of the year, anchored on strong demand for machinery and transport equipment, including computer peripherals, as well as garments and electronics. Unlike in the past when growth in exports was due mainly to electronics exports that were manufactured from materials imported on consignment basis, growth in exports during the review period was traced to merchandise exports that were not bought on consignment. This could be an indication that the turn-key arrangement adopted by a growing number of industries has helped generate higher exports for the country. Under the turn-key arrangement, industries source out their own raw materials and assume all the risks and rewards of production. Thus, in addition to wages, profits are likewise generated by the local industry. Meanwhile, the 5.9 percent expansion in imports of goods was attributed to higher purchases of capital goods as well as the increase in the value of imports of crude petroleum. Aggregate imports of raw materials and intermediate goods dropped due to lower importation of raw materials/accessories for the manufacture of electrical equipment. Industry experts attributed this trend to the increase in the local support industries’ contribution to overall production, which they observed has encouraged import substitution.
On the other hand, the capital and financial account yielded a deficit of $369 million during the period. The other investment account, including loans, currencies and deposits, contributed largely to the deficit. In particular, the general government’s loan repayments exceeded drawings, while there was a net withdrawal of deposits by non-residents from resident banks. Meanwhile, both the direct investment and portfolio investment accounts yielded surpluses, though significantly lower than the surpluses registered a year ago.
These developments in the BOP resulted in higher gross international reserves amounting to $15.4 billion as of end-May 2000, equivalent to 4.62 months of import of goods, services, and income.
Relative to their respective program levels, the current account surplus of $2.4 billion overperformed by $2.0 billion while the capital and financial account was lower by $2.1 billion. Foreign reserves level, at $15.4 billion, was only $700 million short of the year-end target of $16.1 billion.