By Joann Santiago
MANILA, (PNA) – – The financial account of the Philippines’ balance of payment (BOP) reversed to a net inflow in the second half of 2013 against the net outflow same period in 2012.
Data released by the Bangko Sentral ng Pilipinas (BSP) Friday showed that net inflow of the financial account reached $ 127 million from April to June this year, way better compared to the $ 722 million net outflow in the second quarter of 2012.
In a briefing, BSP Department of Economic Statistics Director Rosabel Guerrero attributed this development to the net inflows in portfolio investments.
“Notwithstanding the volatility in the global market as a result of the tapering of the US Federal Reserve’s quantitative easing measures, investors’ confidence in the country’s macroeconomic fundamentals was sustained following the country’s investment grade credit rating,” the central bank said in a report read by Guerrero.
The Philippines received its first investment grade rating on March 27, 2013 when Fitch Ratings upgraded its rating on the country’s long-term foreign currency issuer default rating (IDR) to ‘BBB-‘ from ‘BB+’ with ‘stable’ outlook citing the continued improvement of the country’s external position, domestic growth, and fiscal management among others.
Fitch also upgraded to ‘BBB’ from ‘BBB-‘ with ‘stable’ outlook the country’s long-term local currency IDR, the Philippines’ Country Ceiling to ‘BBB’ from ‘BBB-‘ and the Short-Term Foreign-Currency IDR to ‘F3’ from ‘B’.
Last May 2, or 35 days after the country got its first investment grade rating, Standard & Poor’s (S&P) also upgraded its rating on the country when it changed the rating to ‘BBB-‘ with stable outlook from ‘BB+”.
S&P also revised its rating on the country’s long-term ASEAN regional scale rating to ‘axA-‘ from ‘axBBB+’, the transfer and convertibility assessment to ‘BBB’ from ‘BBB-‘ and affirmed its ASEAN regional scale short-term rating of ‘axA-2’.
“The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt,” S&P credit analyst Agost Benard said in a statement.
Similarly, the current account surplus rose by 9.1 percent year-on-year to US$ 2.5 billion in the second quarter this year.
“The continued surplus in the current account was buoyed by the combined effect of higher net receipts in the secondary income and services accounts as well as the reduced deficit in trade-in-goods which more than offset the reversal of the primary income balance from net receipts to net payments,” the central bank report said.
The Philippines’ BOP surplus in the second quarter this year reached US$ 1 billion, way higher than the US$ 73 million same period in 2012 boosted by higher current account surplus and the reversal of the financial account to a net inflows from year-ago’s net outflows.
Similarly, the BOP surplus at the end of the first half this year reached US$ 2.6 billion, twice the US$ 1.3 billion surplus in end-June 2012 because of “marked improvement in the current account surplus due to higher net receipts of secondary income and services.”
The central bank has a US$ 4.4 billion BOP surplus target this year.
In 2012, the country’s BOP surplus totaled US$ 9.24 billion.