BSP cites need to optimize every OFW dollar
There is urgency for government to optimize the economic impact of the billions of dollars reaching the country each month as a result of the remittance activities of some six million overseas Filipinos, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
In a briefing, the BSP said the volume of money sent home by more or less six million overseas Filipinos may already have reached its peak and may no longer post double-digit growth rates as it did many times in the past.
This makes it imperative for the government to extract as much economic impact as could be had from the monthly remittances that collectively account for up to 12 percent of local output or the gross domestic product this year alone, BSP Deputy Governor Diwa C. Guinigundo said.
“We’re now in a situation where we are seeing a stabilization of flows at mid single-digit levels of between 5 percent to 6 percent,” he told reporters at a briefing on the country’s balance of payments in the first three months of the year.
“I think we have reached a critical number where you have a flattening of the growth of our overseas remittances,” he quickly added.
Where month-on-month growth of 36.7 percent was possible in October 2006, for instance, the BSP now looks forward to more modest growth rates of up to only 6 percent as the remittances begin to “stabilize,” Guinigundo said.
He said the BSP even then refrained from relying too much on the beneficial impact of the remittances helping keep the economy afloat which was why the BSP embarked on a financial literacy campaign early on, reaching quite a number of overseas Filipino workers (OFWs) and their families in and out of the country.
“We recognized that we should not rely exclusively on the remittance. But at this point when the economy is unable to provide jobs to more than six million OFWs, I think the best policy option is to optimize whatever we can for our overseas Filipinos,” Guinigundo said.
Some 3 million or more than 7 percent of Filipinos are unable to find work, forcing thousands to leave the country every month and endure hardships overseas to clothe themselves and feed their families.
The consumption activities of remittance recipients and their families equal 11 percent or 12 percent of local output, helping the economy expand by 7.3 percent in the first three months this year.
From only $17.3 billion last year, the remittances this year was seen reaching $19 billion to $20 billion “still representing a big number relative to local output,” Guinigundo said.
From only around $961 million in 2005, remittance flows posted explosive growth rates the following year with monthly levels consistently exceeding $1 billion every month since May 2006, based on BSP data.
Because the remittances undoubtedly did much good to the economy, the BSP undertook a financial literacy campaign the past several years, resulting in an increasing number of overseas Filipinos and their families now setting aside a portion of their earnings for savings and investment purposes.
The BSP has brought the message of the importance of savings and investment to most cities and localities in the country and to eight overseas destinations around the world, including Hong Kong, Singapore, Jeddah, Riyadh, Milan, Rome, London and Seoul, South Korea.
In 2007 when only slightly more than 27 percent of OFW families saved a part of their monthly allotment, this number has grown to 40.4 percent as of the second quarter this year, Guinigundo said. BusinessMirror
