BSP to review remittance targets amid Mideast unrest, Japan disaster

(Updated 11:20 p.m.) The Bangko Sentral ng Pilipinas (BSP) will review next month its projected 8-percent growth in migrant workers’ remittances, factoring in the impact of tensions in the Middle East and North Africa (MENA) and the earthquake and tsunami in Japan. In a text message to reporters, BSP Gov. Amando Tetangco Jr. said the BSP will review next April the country’s projected gross international reserves (GIR) and balance of payments (BOP) position, with a view to assessing the earlier assumptions against the backdrop of current indicators and developments. He noted that developments abroad influence the country’s external payments position. "We will consider all the data or indicators that we have on both current and (likely) future trends as we scan the operating environment. More directly, even as there are pockets of vulnerabilities in some MENA states due to social unrest, higher oil prices boost the economies of oil producing countries in the Middle East. So there are offsets and counterpoints," Tetangco said. Tetangco also expressed confidence in the resilience of the Japanese, believing "that any adverse effect on their economy would likely be temporary since recovery and reconstruction efforts will likely follow immediately." Foreign exchange projections The BSP sees the GIR reaching a record $68 billion-$70 billion, and $6 billion-8 billion in BOP surplus. The central bank also projects OFW remittances to breach $20-billion this year. The sum of all foreign exchange flowing into the country, the Philippines’ GIR went up 36.8 percent to a record $62.371 billion last year from $45.03 billion in 2009. The country’s BOP, on the other hand, which represents the difference between foreign exchange inflows and outflows, posted a record surplus of $14.4 billion from $6.42 billion. OFW remittances, meanwhile, rose 8.2-percent last year to a record $18.76 billion from $17.348 billion in 2009 Middle East countries accounted for about 16 percent or $2.96 billion of total OFW remittances in 2010. More than half or $1.644 billion came from Saudi Arabia, followed by the United Arab Emirates with $776.3 million, Qatar ($248.8 million), Bahrain ($167.28 million), Kuwait with ($106.5 million), Israel with ($67.3 million), Oman ($66.76 million). Asian countries, on the other hand, accounted for 12.6 percent or $2.36 billion in last year’s OFW remittances. Most of the money came from Japan ($883 million), followed by Singapore ($734.13 million), Hong Kong ($362.5 million), and Taiwan ($121.7 million). "Global confidence and risk tolerance are keys [to] determining future developments, particularly insofar as our external payments are concerned," Tetangco said. Strong external payments position The Philippines’ strong external payments position has continued to shield the country against possible external shocks. It has also helped the Philippines gain a credit rating outlook upgrade from the New York-based Moody’s Investors Service last week and a Standard & Poor’s (S&P) credit rating upgrade on Nov. 12, 2010. Moody's has upgraded the country's credit rating outlook to positive from stable, while S&P has raised the credit rating for government’s long-term, foreign currency debts by a notch — or from three to two notches below investment grade. Moody’s, however, has yet to upgrade the Philippines’ sovereign credit rating that is now pegged at three notches below investment grade. On the other hand, S&P and Fitch Ratings have rated Philippine debt with a stable outlook at two notches below investment grade. — With Paterno Esmaquel II/VS, GMA News