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PHILIPPINES
Central incurs losses on strong peso

EFFORTS to keep inflation at bay in the face of surging dollar inflows and an appreciating peso have cost the Bangko Sentral ng Pilipinas dearly, as the country’s lender of last resort incurred significant losses due to its foreign exchange and liquidity mopping operations in the first half of the year.
BSP Deputy Gov. Diwa C. Guinigundo said the central bank has incurred a P40-billion net loss from foreign-exchange fluctuations and payments to lenders for parking their excess funds in the regulator’s special deposit account (SDA).
Despite a P10-billion operating income, the central bank suffered a P31.473-billion deficit at end-June, a reversal from the P11.259-billion surplus it enjoyed in the same period last year.
The central bank earlier opened its SDA to government financial institutions and banks’ trust departments to siphon off excess money, which if left circulating, that could stoke higher inflation. The central bank’s liquidity management measures have so far paid off, as money supply growth eased from 18.7 percent in July to 14.9 percent in August. Demand for money had been rising above 20 percent each month before the central bank relaxed access to its SDA starting November.
If not for the bank’s deficit, the country’s combined public sector would have registered a higher financing surplus in the first six months of the year.
The first-half consolidated public sector surplus stood at P24 billion, a turnaround from the P13.389-billion deficit in the same period last year.
Apart from the central bank, the national government also pulled down the public sector surplus, as it exceeded its P50.835-billion budget deficit ceiling for the first half due to the failure of the Bureaus of Internal Revenue and of Customs to meet their collection targets.

Full story on http://www.manilatimes.net/national/

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