Remittances from overseas Filipino workers are expected to increase more than expected, reaching $13.4 billion this year and $14.1 billion in 2007 despite the expected slowdown in deployment abroad.

The Bangko Sentral ng Pilipinas (BSP) said over the weekend that OFW remittances in 2006 also showed significant improvement in terms of how much funds were now being sent through the banking system.

BSP Deputy Governor Diwa Guinigundo said the central bank expects banks to account for 90 percent of OFW remittances as costs went down and bank services became more accessible for workers abroad.

Guinigundo said there are indications that by 2007 this proportion could go up further to 95 percent of total remittances.

Guinigundo expects a slowdown in the actual deployment of workers abroad in 2007 since the global economy is also expected to slow down.

"It is very possible that developments in our major partners would affect the deployment and aside from that, there is also a base effect since it was high this year," he said.

What would continue to sustain the increase in total OFW remittances is the steadily increasing average salaries of the predominantly skilled workers who are leaving the country for better opportunities abroad.

Because overall foreign exchange inflows have been stronger than expected, the BSP has already upgraded its projected balance of payments (BOP) surplus for 2006 from $2 billion to $2.8 billion.

The BSP said OFW remittances are increasing faster than originally expected and the projected growth rate had been revised from 11 percent to 15 percent.

Because total inflows have been stronger than expected, the BSP projects the gross international reserves (GIR) to reach $22 billion, $1 billion higher than the original projection of $21 billion made in July.

The BSP said strong OFW inflows as well as export earnings boosted the inflows into the country's current and financial account as well as current account.

The BSP last assessed its BOP projections in July but changing economic conditions as well as better-than-excpected foreign exchange inflows prompted the upgrade, said BSP Governor Amando M. Tetangco Jr.