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Current Account Continues to be in Surplus Despite Higher Imports for 2000-2001

01.16.2003

Governor Rafael Buenaventura reported today that certain items in the balance of payments statement for 2000-2001 had been revised following NSO’s revision of merchandise imports statistics. The Governor observed that, despite NSO’s revision, the current account continued to be in surplus for 2000-2001.

Reflecting the revision, imports per BOP increased by $3.103 billion to $33.480 billion in 2000 and $3.506 billion to $31.986 billion for 2001, bringing the trade balance to $3.815 billion and
-$743 million, respectively. [1]

Meanwhile, net outflows in services were also adjusted upward by $216 million and $214 million, respectively, for 2000 and 2001 to account for the higher freight services corresponding to the incremental imports.

These adjustments bring the current account surplus to $5.870 billion in 2000 (from $9.189 billion) and $305 million in 2001 (from $4.025 billion). At these revised levels, the current account surplus stood at 7.4 percent and 0.4 percent of gross national product for 2000 and 2001, respectively.

Governor Buenaventura also noted that the adjustments in imports would have an offset in the short-term capital account, as the higher imports would reduce the amount of net outflow arising from trade credits. [2]   The significant short-term outflow was earlier interpreted as an indication of capital flight in 2001-2002. The positive correction in the capital account now shows that this was not the case.

Consequently, the net outflow in the capital and financial account declined by $3.103 billion to $3.366 billion in 2000 (from $6.469 billion) and by $3.506 billion to $224 million (from $3.730 billion) in 2001.

Meanwhile, the improvements in monitoring will likewise be reflected in lower negative errors and omissions at 4.3 percent and 0.4 percent of total trade for 2000 and 2001, respectively.

In terms of import cover, the gross international reserves levels were equivalent to 4.1 months and 4.5 months imports of goods and payments of income and services for 2000 and 2001, respectively.

The BSP will also re-work the BOP data for 2002 as soon as the NSO releases the revised imports data for 2002, a process which is expected to be completed by the end of the month.

Gov. Buenaventura emphasized that, with foreign exchange liberalization, Philippine authorities have embarked on a comprehensive assessment of its statistical systems and have undertaken corrective measures to ensure reliable and timely information. The revisions in imports and the BOP statistics are part of the continued efforts of authorities to improve the Philippine statistical systems with the view to improving upon the robustness and reliability of economic and financial data, which are prerequisites to informed policy decisions.

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[1]  Per Balance of Payments Manual of the IMF, imports for BOP purposes exclude those that do not involve change in ownership (e.g., returned goods and temporary imports).

[2]  The net outflow in the short-term trade credits account was derived as the difference of export receivables (export shipments less export receipts) and import payables (import arrivals less import payments).

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