MANILA -- The Philippines has posted a record budget surplus of 31.024 billion pesos (718.46 million U.S. dollars) last month, a positive economic indicator, but at the same time it is facing new challenges, mostly from external factors, which could affect its overall growth forecast this year.
Economic managers of Philippine President Benigno Aquino have said that the country's gross domestic product (GDP) could grow 5- 6 percent this year.
Last year, the GDP growth was a dismal 3.7 percent, less than half of the 7.6 percent growth in 2010.
One positive economic indicator was the budget surplus recorded in April, which brought the deficit for the first four months of the year to 2.88 billion pesos (66.74 million U.S. dollars).
The four-month deficit was a reversal from 62 million pesos (1. 39 million U.S. dollars) surplus reported in the same period of 2011, which was due to the government's under-spending during the first year of the Aquino administration.
According to the Bureau of Treasury (BoT), from January to April, expenses reached 517.13 billion pesos (11.98 billion U.S. dollars), accounting for 58 percent of the programmed outlay for the first half of the year. The expenses during the period were also 12.1 percent higher year on year.
Also the four-month revenues totaled 514.24 billion pesos (11. 92 billion U.S. dollars), which was already 66 percent of the goal for the first semester. They were also 11.4 percent higher than those of last year.
Despite the budget surplus, however, events in the global arena, particularly in the eurozone, could adversely affect the country' s economic recovery.
Aside from the United States and Japan, Europe is the destination of the country's main exports and a source of remittances from overseas Filipino workers. It is also one of the main sources of direct investments to the country.
Speculations that Greece would exit from the eurozone after its scheduled elections next month had also contributed to risk aversion of international fund managers.
In fact, the gross inflow of speculative investments or "hot money" into the country has plunged 61.3 percent in the first two months of the year.
Data from the Bangko Sentral ng Pilipinas (BSP), the country's central bank, showed that foreign portfolio investments totaled only 281 million U.S. dollars from January to February, or 446 million U.S. dollars lower than the 727 million U.S. dollars booked in the same period last year.
Gross inflows fell close to 10 percent to 2.706 billion U.S. dollars in the first two months from 3.006 billion U.S. dollars in the same period last year while gross outflows went up by 6.4 percent to 2.425 billion U.S. dollars from 2.279 billion U.S. dollars.
According to BSP Governor Amando Tetangco Jr., for February alone there was a net outflow of 305.3 million U.S. dollars compared to a net inflow of 534.08 million U.S. dollars in the same month last year.
Tetangco pointed out that the situation was not unique to the Philippines as other emerging economies in the region also suffered heavy foreign capital outflows.
Due to the continued outflow of portfolio money, trading at the Philippine Stock Exchange has slackened with the main index sliding to below the 5,000 mark last week and the Philippine peso also weakened, closing at 43.130 pesos to the U.S. dollar last Tuesday.
Analysts said that the peso is expected to weaken further to 43. 50-to-a-dollar level in the coming days as the ongoing debt crisis in the eurozone heightens risk aversion globally.
"We may continue to see the peso testing the 43.50 (to a dollar) level in the week or so ahead. Volatility due to concerns on Europe's debt crisis is seen to slow down growth,"Jonathan Ravelas, market strategist of Banco de Oro, one of the country's largest banks, said.
What is compounding the problem is that the amount of the country's outstanding debt had also breached the 5 trillion pesos (115.86 billion U.S. dollars) mark in March.
Data from the BoT showed that with 5.089 trillion pesos (117.93 billion U.S. dollars) in debt means that each Filipino now owes domestic and foreign lenders 53,009 pesos (1,228.37 U.S. dollars).
The debt stock breached the 5 trillion pesos level three months later than the government had expected as it tried to consolidate the state's financial obligations as well as speed up the disbursement of public funds.
Treasury officials said that the outstanding debt in March was 176.23 billion pesos (4.08 billion U.S. dollars), or 3.6 percent, higher than that of February due to a net issuance of domestic securities.
The debt stock at of the end of March was also 8.2 percent, or 383.31 billion pesos (8.88 billion U.S. dollars), higher than the level posted in the same month of 2011.
By Alito L. Malinao