PHILIPPINE STAR - May 20, 2009

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OFW inflows remain strong amid crisis

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said its zero-growth remittance projection for 2009 is now considered conservative, with inflows growing by 2.7 percent in the first quarter of the year.

BSP Governor Amando M. Tetangco Jr. said remittance inflows are still positive, reflecting the double-digit increase in the deployment of new workers abroad that easily offset job losses and wage cuts.

Because of the strength of remittance inflows as well as the initial resilience of the country’s exports that Tetangco said might not fall as much as expected, the BSP had also started reviewing its balance of payments forecast for the year.

The BSP’s 2009 BOP forecast pegged a $700-million surplus by yearend – not so much when compared to 2006 and 2007 levels but significantly better than the 2008 surplus of $88 million. “We are still projecting a surplus about $700 million, but we will review that,” Tetangco said.

According to Tetangco, the $2.2-billion surplus in the first four months resulted from the decision of the National Government to frontload its borrowings from both commercial and official development assistance (ODA) sources.

“But there will be foreign exchange requirements by the end of the year,” Tetangco pointed out. “We have to look at the improvements in inflow, particularly considering the impact of the improvement in risk appetite that could put funds back in emerging markets.”

Tetangco also expressed optimism that there would be improvements in the global economy by the second half of the year and this could mean exports would not plummet as badly as expected.

“So there could be slower decline in exports in second half,” he said.