OFW cash remittances the highest in 17 months but weak peso will soon be felt


By Corina Oliquino| FilAm Star Correspondent

MANILA — The Bangko Sentral ng Pilipinas (BSP) revealed last June 18 that personal remittances in April grew at the fastest pace in 17 months, crediting it to the steady inflows from overseas Filipino workers (OFWs) during the month.

According to BSP data, personal remittances grew by 12.9 percent to $2.616 billion in April from the $2.317 billion in the same month last year.

“This is also the fastest growth registered in 17 months since remittances rose by 18.4 percent to $2.448 billion in November 2016,” the BSP noted.

BSP defined personal remittances as the sum of transfers sent in cash or in-kind via informal channels.

In a report by GMA News, meanwhile, cash remittances or money transfers through banks grew by 12.7 percent to $2.347 billion from April 2017.

This latest figure from the BSP brought the year-to-date personal remittances to $10.426 billion, and cash remittances to $9.353 billion.

“The continued growth in personal remittances during the first four months of 2018 was driven by steady remittance inflows from land-based OFWs with work contracts of one year or more, which aggregated to $8.1 billion,” the BSP said.

The BSP also attributed the increase to “higher compensation of sea-based workers and land-based workers with short-term contracts which reached $2.1 billion.”

“The primary contributors to the growth in remittances during the month are the United States with 4.2 percentage points contribution to the 12.7 aggregated growth, Canada (1.9 percentage points) and Singapore (1.0 percentage points),” the BSP added.

Aside from the three countries, other main sources of inflows for the period were Saudi Arabia, United Arab Emirates, Japan, United Kingdom, Germany, Qatar, and Kuwait.

Financial analysts: Weak peso to also hit OFWs
In a report on GMA News’ Balitanghali, experts have warned that the weakening peso could also hit OFWs.

Financial Analyst Astro del Castillo explained that families of OFWs may soon feel the negative effects of a weak peso as other Filipinos due to the higher price of oil and other goods.

“Dahil sa paghina [ng piso], posibleng tumaas pa rin ang presyo mo sa langis. Pag tumaas ang langis, dahil ito ang dugo ng ating ekonomiya, tataas naman most likely ang presyo ng mga bilihin,” Castillo said.

According to the peso-dollar exchange rate, utility bills may also adjust for the worse as the Foreign Currency Differential Adjustment mechanism will allow companies to adjust their prices.

“Kunwari ang kanyang sa cost niya, interest nung bumili siya ng equipment, substation, nangutang sila sa ibang bansa, dolyar ang kanilang utang. Yung dolyar na yun, yung pagbayad nila ng interes, mas mataas ang babayaran nila,” Economics Prof. Vic Abola told GMA News.

Exporters, meanwhile, expect a positive effect of the peso’s weakening on their business but importers face higher prices for their textiles and other raw materials that will be offset by higher prices.

This is all due to the Philippine peso hitting its 12-year record low on June 14, at Php53.27 from June 13, Php53.23 to a $1 – edging closer to the Php53.55 to a $1 low record on June 29, 2006.