The central bank governor said Thursday that remittances growth is likely to slow down to single digits this year, but he was optimistic about maintaining the country’s credit ratings.
Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas said remittances—mainly from overseas Filipino workers (OFWs)—are expected to grow from 6 percent to 9 percent this year despite the global financial crisis.
Developed economies, including those that employ foreign workers, were badly affected by the collapse of the major investment banks in the US brought about by the subprime mortgage crisis.
Remittances of overseas Filipinos coursed through banks rose by 15.5 percent year-on-year to $13.707 billion in January to October last year, up from $11.866 billion in the same period in 2007.
The remittances in June 2008 of $1.450 billion were the highest posted per month since in 1989, when the central bank started to have a separate category for overseas workers’ remittances in its foreign exchange statistical monitoring system. The second highest was October 2008, with $1.434 billion.
Tetangco also sees the Philippines maintaining its credit rating, as the economy is likely grow despite the global crisis.
“I think the Fitch move to keep outlook stable is a general view among other rating agencies,” he told reporters in an e-mail. “We’re not expecting any downgrade from others [international ratings agencies] as long as we keep [the economy] on track.”
Fitch Ratings Inc. earlier said that it could keep its stable rating outlook on the Philippines. Besides Fitch, other international rating agencies are set for an official visit to the country starting this month, when they are to conduct an annual update on the local fiscal and macroeconomic conditions.
The Philippines has maintained its economic growth, as measured by the gross domestic product (GDP), at 4.6 percent in the third quarter and second quarter last year, although slower than 4.7 percent in the first quarter last year. GDP is the total cost of all goods and services produced in the country in a year.
For 2009, the Development Budget Coordination Committee (DBCC) projected a GDP growth of 3.7 percent to 4.7 percent this year. For 2008, the committee projected a GDP growth of 4.1 percent to 4.8 percent.
Meanwhile, Tetangco said the Bangko Sentral is focused on keeping inflation at manageable levels to sustain long-term growth. The central bank is expected to further cut its key policy rates to boost bank lending and fuel economic activities.
The central bank’s overnight borrowing and lending rates stood at 5.5 percent and 7.5 percent, respectively.
In August 2008, Japan Credit Rating Agency affirmed its ratings on Philippines sovereign debt because of stable economic growth in the first two quarters of the year, well-capitalized banks, and improved fiscal position.
The agency affirmed the rating of BBB minus on the foreign currency and local currency long-term senior debts, which are below investment grade. The agency is also considering an upgrade of the ratings if the country’s economic performance shows stability.
Rating and Investment Information Inc. (R&I) also affirmed the Philippines’ foreign currency issuer rating at BBB minus, while maintaining the rating outlook at positive.
Meanwhile, Fitch and Standard & Poor’s Ratings Services also maintain a stable outlook for the Philippines, while Moody’s Investors Service bestowed a positive outlook, which means that it is likely to raise the country’s actual rating in the next six months to a year.
The three major credit rating companies hold a junk or below-investment grade rating on the Philippines, which bars many investors from placing their bets in the country. –Maricel E. Burgonio Reporter, Manila Times