RCBC chief economist Michael Ricafort
MANILA – The improvement of the country’s fundamentals is expected to further boost balance of payment (BOP) position and foreign reserves, which both posted record highs in 2020.
The Bangko Sentral ng Pilipinas (BSP) reported on Monday the 2020 balance of payment (BOP) surplus rose to USD16.02 billion, more than twice the USD7.84-billion surplus in the previous year while gross international reserves (GIR) increased to USD110.12 billion from end-November’s USD104.82 billion.
In a report Tuesday, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort attributed these outturns partly to proceeds of the government’s foreign borrowings, both to boost regular funding needs and the requirements to finance coronavirus disease 2019 (Covid-19) programs; narrower trade deficit due to lower net imports because of the pandemic; increased net income from abroad; continued inflows of foreign direct investments (FDIs); and revenue inflows of the business process outsourcing (BPO) sector.
He said the surplus in the country’s BOP, which is the record of a country’s total transactions with the rest of the world, is expected to be sustained amid dollar inflows from these factors.
Ricafort said the reopening of the economy and availability and rollout of Covid-19 vaccines are projected to also enhance investors’ sentiments and attract more foreign investments into the county.
The upgrade of the country’s investment grade rating to A-level by Japan Credit Rating Agency (JCRA) last year and affirmations by Moody’s Investors Service, Fitch Ratings, and S&P of their respective investment grade ratings on the country also back the country’s attractiveness to foreign investors, he said.
“(These factors) could also further help boost the country’s BOP, and, in turn, GIR to new record highs, going forward,” he added.
Ricafort, however, cited that risks remain given the possible lockdowns if more Covid-19 infections are registered vis-à-vis the new variants, which will dampen growth opportunities. (PNA)
