BSP trims growth target on OFW inflows

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is set to cut the growth target on overseas Filipino workers’ remittances due to the political tensions in Middle East and North African (MENA) states and the disasters in Japan.

BSP Deputy Governor Diwa Guinigundo said authorities would review the country’s monetary targets aimed at lowering the growth target on remittances from Filipinos abroad as well as its corresponding impact on the balance of payments (BOP) position.

“There could be some downward adjustments,” Guinigundo stressed.

The BSP sees OFW remittances growing by another eight percent, breaching the $20 billion level this year.

OFW remittances went up by 8.2 percent to hit a new record level of $18.76 billion last year from $17.348 billion in 2009 due to the continued demand of skilled Filipino workers abroad.

He pointed out that the BSP would take into consideration the political tensions in MENA states as well as the 8.9 magnitude earthquake and tsunami in Japan when it reviews the country’s monetary targets next month.

He added that the BSP usually conducts a review of the country’s monetary targets every April and October of each year to look into developments affecting the country’s external payments position.

Countries in the Middle East accounted for about 16 percent or $2.96 billion of the total OFW remittances last year. More than half or $1.644 billion came from Saudi Arabia followed by the United Arab Emirates with $776.3 million, Qatar with $248.8 million, Bahrain with $167.28 million, Kuwait with $106.5 million, Israel with $67.3 million, Oman with $66.76 million, and others.

On the other hand, Asian countries accounted for 12.6 percent to $2.36 billion of the total amount of money sent home by OFWs last year. Japan was the major contributor with $883 million followed by Singapore with $734.13 million, Hong Kong with $362.5 million, and Taiwan with $121.7 million.

He pointed out that developments abroad play a crucial role in the country’s external payments position. 

As of October last year, the BSP set an eight percent growth target for OFW remittances and sees the country’s BOP surplus stabilizing at $1.9 billion.

However, Guinigundo said the BSP is now looking at a lower OFW remittance growth target and a higher BOP surplus.

BSP Governor Amando Tetangco Jr. said earlier that the central bank sees the country’s BOP surplus ranging between $6 billion and $8 billion while the country’s gross international reserves (GIR) would hit a new record high of $68 billion to $70 billion.

The country’s GIR - the sum of all foreign exchange flowing into the country - surged 36.8 percent to a record level $62.371 billion last year from $45.03 billion in 2009 while the BOP - the difference of foreign exchange inflows and outflows - posted a new all-time high surplus of $14.4 billion from $6.42 billion.