BSP cuts ’15 GIR forecast

MONETARY authorities expect the country’s gross international reserves (GIR) to settle at $80.7 billion by the end of the year, lower than the previous target of $81.6 billion, partly due to slower growth in dollar remittances.

The Bangko Sentral ng Pilipinas (BSP) noted that the adjusted forecast remained higher than the $79.5 billion posted last year.

The expected end-2015 GIR “remain ample,” the BSP said, as these could cover almost 10 months’ worth of imports of goods as well as payments of income and services. As of the end of November, the GIR stood at $80.6 billion, BSP data showed.

An increase in the balance of payments (BOP) surplus to $2.2 billion in 2016 from the projected $2 billion this year is seen resulting in an increase in the GIR to $82.7 billion next year, equivalent to nine months of import cover. Last year, the BOP swung to a deficit of $2.9 billion.

The BSP had also cut slightly its year-end cash remittances projection to $25.3 billion mainly due to the softening of demand for workers in markets overseas.

Last week, the BSP said the growth forecast for 2015 was reduced to 4 percent from 5 percent amid “continued dollar appreciation relative to the currencies of major host countries.”

The BSP also cited “weakening” job orders, especially from the Middle East and North Africa.

The BSP’s earlier forecast was a rise in remittances from overseas to $25.6 billion this year from $24.3 billion last year.

From January to October, cash remittances totaled $20.6 billion, up 3.7 percent year-on-year. In October alone, Filipinos abroad sent back home cash worth $2.232 billion—the second highest monthly amount thus far, exceeded only by the $2.317 billion recorded in December last year.

The BSP nonetheless expressed confidence that “continued remittances from overseas Filipinos are still expected on account of the steady deployment of overseas Filipino workers, greater diversification of country destinations and shift to higher-skilled types of work.”

For 2016, the rate of increase in cash remittances is expected at 4 percent to $26.3 billion.

BSP Deputy Governor Diwa C. Guinigundo told reporters that the central bank was not seeing a slowing remittances growth.