BSP increases remittance growth target this year

Filipinos working overseas will likely send home more money than initially expected this year, the Bangko Sentral ng Pilipinas (BSP) said, as it cited strong demand for Filipino workers abroad and increased deployment of professionals. Central bank Governor Amando M. Tetangco Jr. told reporters last Friday the BSP now expected remittances to grow by 8 percent, up from an earlier forecast of 6 percent. He cited continued demand for low- to high-skilled Filipino workers. [There is also an] increase in the deployment of professionals and highly-skilled workers who get higher salaries [and] who are able to remit more," he added. Tetangco likewise cited more remittance centers and better correspondence between local and foreign banks. The Philippines would likely receive over $18 billion in remittances this year, he added. Money sent home by Filipinos working and living abroad has continued to rise, reaching $2.8 billion as of February, 7.8 percent higher than in the same two-month period a year ago, central bank data showed. Remittances grew by 5.6 percent to $17.1 billion last year, faster than the central bank’s projection of a 4-percent increase. The money sent home supports private consumption, which accounts for three-fourths of the Philippines’ gross domestic product. Tetangco said the central bank also planned to increase its 2010 surplus projection for the balance of payments (BoP), which means more foreign exchange entering, improving the country's ability to repay foreign debt. He declined to disclose the new figure, saying they have to double-check the data first. The Philippines had a payment surplus of $1.36 billion in the first quarter, lower than $1.73 billion a year earlier. It ended last year with a surplus of $5.295 billion, higher than $89 million a year earlier and the BSP’s projection of $4-5 billion. The central bank traced this to higher remittances from Filipinos overseas, better-than-expected income from its investments abroad and capital inflows. Tetangco also said the central bank expected a sizeable surplus next year. He added that they would raise growth estimates for foreign direct investments (FDI) and foreign exchange holdings. Last month, Deputy Governor Diwa C. Guinigundo said the BSP expected gross international reserves to reach $47-$48 billion, and FDIs to hit $1.8 billion this year. — Don Gil K. Carreon, BusinessWorld