THE Bangko Sentral ng Pilipinas (BSP) is counting on the business-process outsourcing (BPO) sector to offset any decline in remittances from overseas Filipino workers (OFWs) this year due to the coronavirus disease 2019 (Covid-19) pandemic.
BSP Governor Benjamin Diokno, in a recent Senate hearing, said the BPO industry is seen to be robust despite the pandemic as it remains operational.
“Whatever we lose in the overseas Filipino remittance, we can make that with the BPO income because I think as a result of the pandemic, that sector will be robust, will be stronger this time,” he said.
Personal remittances dipped by 10.9 percent to $2.62 billion in February—the lowest since $2.55 billion in June last year—from $2.94 billion the previous month. Year-on-year, however, figures were up by 2.6 percent from $2.56 billion in 2019.
In the first two months, personal remittances rose by 5 percent to $5.56 billion from $5.3 billion year-on-year.
Personal remittances grew by 3.89 percent to $33.47 billion last year from $32.21 billion in 2018.
The BSP has cut down its growth forecast for OFW remittances to 2 percent from 3 percent before.
“We are still forecasting growth…but we are closely monitoring the development,” said Diokno.
Analysts, meanwhile, are offering less-than-optimistic projections as the pandemic-induced lockdowns can jeopardize the employment of OFWs.
ING Bank Manila Economist Nicholas T. Mapa told the BusinessMirror earlier that remittances will likely contract by 2.5 percent to 6.7 percent this year. “We believe OFWs will continue to fight to get home those remittances, but the challenge posed by Covid-19 appears extremely daunting,” he added.
RCBC Chief Economist Michael L. Ricafort said remittances could register nearly zero year-on-year growth or even shrink by at least low single-digit levels beginning March given the current situation.
Meanwhile, former Socioeconomic Planning Secretary Ernesto M. Pernia earlier said that remittances would slip by 20 percent to 30 percent due to the pandemic.
According to the Information Technology and Business Process Association of the Philippines (Ibpap), the industry revenue grew by 7.34 percent to P26.3 billion last year from P24.5 billion in 2018. It is projecting its topline figures to reach $32 billion by 2022, lower than earlier forecast of $38.9 billion due to uncertainties on policies here and abroad.
Ibpap said the sector is currently employing 1.3 million workers, and the figure is expected to expand to 1.57 million employees by 2022.
After a series of initiatives to inject liquidity into the economy, Diokno also stressed that the BSP is willing to cut the reserve requirement further if needed.
“I can assure you, if there is a need for additional liquidity, BSP will cut the reserve requirement,” he said.
Diokno recalled that the reserve requirement ratio (RRR) on reservable liabilities of universal and commercial banks has been reduced by 6 percent since the beginning of his term, effectively releasing P600 billion worth of liquidity. RRR currently stands at 12 percent.
Apart from this, the Central Bank has also cut key policy rates by 50 basis points, bringing overnight repurchase rate to 2.75 percent.