Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said Thursday the $2.2-billion balance of payments surplus target for 2016 remains realistic, amid the robust growth in remittances, foreign direct investments and portfolio investments.
“We remain optimistic that we shall be able to achieve our BoP target of some $2.2 billion by the end of 2016,” Guinigundo said in a text message.
The BoP position, which represents the country’s external strength, swung to a surplus of $854 million in March from a deficit of $244 million a year ago, on sustained net inflows of hot money and remittances.
Data showed the March surplus was the highest in 13 months, or since February 2015 when it reached $985 million. It was also a sharp turnaround from the $316-million deficit in February 2016. This trimmed the BoP deficit in the first three months to $275 million.
Guinigundo said capital flows-wise, foreign direct investments and portfolio investments were seen to remain generally resilient.
Foreign portfolio investments or ‘hot money’ in March posted a net inflow of $482 million, the highest in 12 months, on renewed investors’ confidence.
Money sent home by overseas Filipinos grew 9.1 percent in February to $2.1 billion from $1.935 billion a year ago, the fastest in eight months.
Bangko Sentral earlier projected remittances to grow around 4 percent this year, or at the same pace in 2015.
Guinigundo said monetary authorities were closely monitoring external developments because of their impact ton external trade. These are the tightening moves of the US Federal Reserve, the growth trajectory of the Chinese economy and oil prices in international markets.
Meanwhile, Bangko Sentral said inflation rate was expected to remain manageable in the coming months on low oil prices.
Highlights of the Monetary Board’s meeting on March 23 showed the latest baseline inflation forecasts were lower for 2016 until 2017.
“The prevailing balance of risks to future inflation remains tilted to the downside. Slower global economic activity and potential second- round effects coming from persistently low international oil prices pose downside risks,” the Monetary Board said.
Pending petitions for adjustments in electricity rates and the impact of El Niño conditions on food prices and utility rates were seen as upside risks to inflation.
Bangko Sentral earlier set an inflation target of 2 percent to 4 percent for 2016 to 2018.
ING Bank Manila senior economist Joey Cuyegkeng said Bangko Sentral was likely to keep policy settings steady in the near term on low oil prices and strong economic growth this year.