Remittances poised for drop due to virus as BSP pledges to do 'whatever it takes'

MANILA -- Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Tuesday dollar remittances this year could shrink due to the coronavirus pandemic, adding he would do "whatever it takes" to support the economy.

Cash remittances could contract by 5 percent, Diokno said, from the previous assumption of a 3 percent growth. It will be the first drop in remittances in 2 decades, according to Bloomberg data.

Business process outsourcing receipts -- expected to grow 2 percent this year from the previous forecast of 5 percent -- will partly make up for the decline in remittances, Diokno told ANC's Market Edge.

The projected decline in remittances is "not a major blow to our external position," Diokno said. "We still expect a positive balance of payment position," he said.

The economy is in a "position of strength" to respond to the coronavirus pandemic, as affirmed by a recent credit rating upgrade, Diokno said.

Diokno said the peso was likely to fall within the P50 to P54 range to the dollar, adding this should be no cause for concern. However, export earnings could be hurt should the peso strengthen to the P48 level, he said.

"The outcome from appreciation last week to slight depreciation this week is within the low range of the assumption so it does not really bother us at the moment where we are," Diokno said.

The Japan Credit Ratings Agency's "A-" rating for the is a "significant achievement in a sea of downgrades," he said.

"We're not out of the woods yet. We continue to be careful, we continue to be watchful of the developments. We plan to do whatever it takes to make sure there is no permanent scar on the Philippine economy and society," he said.

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President Rodrigo Duterte maintained the general community quarantine in Metro Manila until June 30, allowing limited resumption of work, businesses and public transportation. The GCQ is 2 steps above the "new normal" or the lifting of quarantines restrictions.

The Monetary Board will meet again on June 25. Diokno has so far cut the overnight borrowing rate used by banks to price their loans by 125 basis points this year, 100 of which was delivered during the 11-week lockdown or enhanced community quarantine.

Diokno also has authority from the Monetary Board to match the 200-basis point cut in the RRR or reserve requirement ratio for banks that he delivered this year.

The Philippines is expecting the economy to shrink by 2 to 3.4 percent this year after the virus lockdown caused the first quarterly contraction in 22 years, recorded in the January to March period.

Unemployment in April soared to a record 17.7 percent, causing the total number of jobless Filipinos to swell to 7.3 million.

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