OFW money, BPO to improve balance-of-payments forecast

Friday, June 23, 2006

By Maricel E. Burgonio, Reporter THE remittances of overseas Filipino workers combined with higher revenues from business process outsourcing services and export sectors could further improve the outlook on Philippine balance of payments (BOP) this year, Bangko Sentral ng Pilipinas (BSP) said. At a press briefing, Iluminada Sicat, director of BSP’s Department of Economic Statistics (DES), said the forecast on balance of payment may be upgraded in the middle of the year when central bank reviews its position based on the significant improvement of BOP in the first quarter of the year. The BOP in the first quarter of 2006 yielded a surplus of $2.13 billion, nearly three times over the $782-million surplus it posted in the same quarter in 2005. This has surpassed BSP’s forecast for BOP, which is expected to reach $1.6 billion this year. BSP Deputy Governor Diwa Guinigundo earlier projected to exceed the full-year BOP forecast. Meanwhile, Sicat said the BPO activities are not well captured in terms of its total account to services growth. The BSP will finalize its survey to get the real picture of BPO activities in terms of reported earnings. “We’re focusing to cover organized BPOs, which represent 80 percent of the BPO industry,” she said. The robust external payments position brought the BSP’s gross international reserves (GIR) to $20.65 billion as of end-March 2006, up by 11.6 percent compared with the end-December 2005 level of $18.49 billion. Sicat said the revisions in BOP components will be based on the move of Federal Reserves interest rates, which are seen to increase to 5.25 percent before the end of June this year from the current 5 percent. Also, the BSP will base its BOP forecast on the result of the postprogram monitoring mission of the International Monetary Fund. Total exports of goods during the first quarter of the year grew by 14.2 percent to reach $10.69 billion, exceeding the 8-percent full-year forecast of the year.

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