Nov. sends year-to-date BoP to deficit
THE COUNTRY’s balance of payments (BoP) sustained a deficit for the second straight month in November, which saw the widest gap in nearly three years, according to central bank data that also showed the year-to-date tally swinging to a deficit.
The Philippines’ external payments position saw a $1.671-billion deficit last month, much wider than October’s $ 183- million gap and a $141-million shortfall a year ago, according to data the Bangko Sentral ng Pilipinas (BSP) released yesterday.
This is the biggest deficit since a $4.48-billion gap posted in January 2014 amid global markets’ “taper tantrum” as the US Federal Reserve then began to trim its massive bond- buying program in the face of economic recovery after the 2008 Global Financial Crisis.
The BoP is a snapshot of the country’s transactions with the rest of the world for a specific period. It has three components, namely:
• current account that covers trade in goods and services, as well as remittances from Filipinos abroad;
• capital account covering fund transfers as well as acquisition and disposal of nonproduced, nonfinancial assets between residents and nonresidents, among others;
• and financial account consisting of direct, portfolio and other forms of investment.
A deficit shows that more funds left an economy than flowed in.
While the BSP did not give an explanation for November’s huge deficit, the current account has been particularly watched due to a protracted weakness in merchandise exports amid a slump in global demand, particularly in China and advanced economies.
Sales abroad of Philippine goods suffered 17 straight months
THE government and the Asian Infrastructure Investment Bank (AIIB) are eager to get started on identifying and funding infrastructure projects, with officials touting the Beijing-backed lender’s speed in evaluating loan proposals and the low cost of its financing.
“We are all very eager to finalize the infrastructure projects in your country… This time, we are very happy we can really talk about something to do in your country,” said AIIB President Jin Liqun in a meeting last week with the Department of Finance (DoF), Depatment of Budget and Management ( DBM), and the National Economic and Development Authority (NEDA).
“Compared to the Asian Development Bank and the World Bank, it will take less than half a year in AIIB to process loans,” Mr. Jin said.
“They just want to finish things faster, they have less bureaucracy,” added NEDA Director- General and Socioeconomic Planning Secretary Ernesto M. Pernia, in a phone interview.
The DoF is due to release the initial payment confirming the Philippines’ membership this month, after legislators ratified the terms of entry earlier this month.
National Treasurer Roberto B. Tan said recently that the government is to release the initial payment amounting P2 billion to AIIB within the month, and comply with AIIB’s deadline.
According to the Articles of Agreement, the Philippines has to pay an initial subscription before Dec. 31, and transmit the instrument of ratification, which was approved by the Senate on Dec. 5.
“We’d like to thank you very much for speeding up the ratification so that we can start very soon. We believe there are so many things that we can do in your country,” Mr. Jin said.
Mr. Tan said that the government is looking at $300-$500 million in AIIB loans for the initial year of Philippine membership, though he added that the bank will need to send a mission to evaluate the proposed projects.
Mr. Pernia added that the government will immediately avail of the loans “as soon as possible, as soon as we can.”
Philippine economic managers have said that they might present to the AIIB the EDSA Bus Rapid Transit (BRT) and the Metro Manila flood control projects because they are among the most advanced in terms of government approvals.
Mr. Pernia added, however, that the projects to be presented for financing are still up for discussion. “It’s not fixed yet. It can be any of the projects we have on our list,” he said.
He add that further discussions of projects that are viable for AIIB funding could take place at the Development Budget Coordination Committee ( DBCC) meeting this afternoon involving the DoF and DBM. —