Business Mirror - THE surplus in the
balance of payments (BOP) in 2012 was not as high as the year before but
at $9.23 billion still exceeded the forecast for the year.
At the annual
reception of bankers that the Bangko Sentral ng Pilipinas hosted on
Friday, BSP Governor Amando M. Tetangco Jr. said the surplus, indicating
excess foreign-currency earnings over expenses, continued to widen.
He announced the
surplus state of the BOP in the wake of an earlier announcement citing
the sustained rise in gross international reserves, an indicator of
capacity to pay for imports and maturing foreign debt, to $84.2 billion.
These and many other
macroeconomic developments during the year should “continue to enhance
confidence in our ability to meet potential shocks” down the line,
Tetangco said.
This pertains, for the
most part, to the disorderly unwinding of short-term portfolio
placements by foreign fund managers looking to exploit emerging markets
like the Philippines, where the interest differential and prospect of
continued growth form an irresistible incentive not to be missed.
Tetangco,
in a moment of reflection, said the Philippines growth story averaging
6.5 percent in just nine months of 2012, when inflation was also well
behaved at just 3.2 percent, became a victim of its own success.
“Now, our challenge is
dealing with the consequences of this ‘apparent’ success. In
particular, surges in capital flows. As Fed Reserve Chairman Ben
Bernanke stated, emerging markets have been attracting capital because
we have remained resilient even at the height of the recent crisis.
Essentially, he was saying we are the victims of our own success. Of
course, the near-zero interest-rate regimes in the advanced economies
have also been a factor behind the strong capital flows going to
emerging markets,” he said.
He urged that the
capital-flow surges be converted into “real economic assets, such as
factories in the manufacturing sector or storage facilities in the
agricultural sector. In doing so, we would have leveraged the financial
resources into added productive capacity.”
Tetangco bared a
degree of apprehension over the likelihood that the foreign capital
inflows will remain in the financial sector, where its speculative
intent could wreak havoc on the economy down the line instead of
boosting the growth potential with the building of bricks-and-mortar
productive enterprises that generate taxes for the government and employ
the bulk of some 3 million jobless Filipinos at present.
“If these resources
remain financial in nature and in search of better returns for risks
they deem acceptable, then the onus shifts… once again…to the BSP. More
than ever, monetary policy-making requires great care and
balance—balance to contain speculative actions but not to discourage
investments… and balance to maintain financial and macroeconomic
stability but not to stifle competition and growth,” he told the
gathered crowd of bankers and businessmen.
The surplus BOP was
highest month-on-month at $3.18 billion in July last year, when the BSP
cut its policy rates by 25 basis points to 3.75 percent for borrowing
and 5.75 percent for lending, and in November, when the surplus for the
month stood at $2.16 billion also following another 25-basis point cut
the previous month.
Tetangco and six other
members of the policy-making Monetary Board imposed a full-percentage
point cut in 2012 as part of the broad effort to manage the foreign
capital inflows.
BSP Deputy Governor
Diwa C. Guinigundo also told reporters on Friday the anticipated surplus
state in the BOP this year was likely to moderate to a lower level as
import activities were seen rising in part because the local currency
the peso has grown stronger the past 12 months and because much of those
purchases are capital goods.
As a result, local
output this year was seen sustained at a high level, averaging 6 percent
to 7 percent, based on a forecast bared by the National Economic and
Development Authority.
The World Bank
anticipates the Philippines growing by around 6.2 percent this year but
homegrown analysts at the First Metro Investments Inc. and at Banco de
Oro, for example, see growth averaging as high as 8 percent this year.
For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.ph.
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