MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is urging beneficiaries of remittances to channel the money sent home to the Philippines by their loved ones overseas for more productive uses such as savings and investments.
BSP Governor Amando Tetangco Jr. said during the signing of a memorandum of agreement (MOA) between the central bank and the Commission on Filipinos Overseas the need for beneficiaries of overseas remittances to save and invest more.
“We would like to harness the potential use of remittances for savings and investments,” Tetangco stressed.
He pointed out that the World Bank has ranked the Philippines as the fourth largest in terms of remittances. Remmittances from overseas Filipinos grew 7.2 percent to a record level of $20.117 billion last year.
He added that the BSP is confident that remittances would grow five percent this year as the amount of money sent home by overseas Filipinos climbed 5.4 percent to $1.557 billion last January from $1.476 billion in the same month last year.
Higher remittances result to stronger external payments position, boosting the country’s buffer fund to fend off the impact of global shocks.
Results of the BSP’s Fourth Quarter 2011 Consumer Expectations Survey (CES) showed that the percentage of households of OFWs that set aside money for savings has increased to 42.6 percent in the fourth quarter of last year from 35.5 percent in the third quarter
However, the survey showed a drop in the number of OFW households that use remittances for investments to 6.4 percent in the fourth quarter of last year from 9.1 percent in the third quarter, but increased compared to 5.8 percent in the fourth quarter of 2010.
The survey also showed that beneficiaries of OFW remittances that used their remittances to buy consumer durables increased to 27.4 percent from 26.9 percent while those that used their money to buy houses likewise rose to 11.4 percent from 9.3 percent. A sharp rise was also noted for those who used remittances to acquire motor vehicles to 8.3 percent from 5.7 percent.
Tetangco said the BSP has been encouraging beneficiaries of remittances from their loved ones working overseas to save and invest regularly to improve the financial condition of the Philippine economy.
“While remittances boost economic activity through higher private consumption, the potential of remittances for other productive uses such as savings and investments has yet to be maximized,” the BSP chief.
Last year, remittances accounted for nine percent of the country’s domestic output as measured by the gross domestic product (GDP).
Imelda Nicolas, chairperson of the Commission of Filipino Overseas, said hard earned and pooled investments should be used effectively and productively through cooperatives, microfinance, migrants’ savings, investments programs, and social enterprises.
“These remittances will be our tool in transforming several underdeveloped areas in the country into vibrant communities,” she added.
The Remittance for Development Council is an advisory and policy-recommending body that would help organize and optimize the channeling of individual and collective remittances for national and local developments.
The council would ensure the smoother inflow of remittances and promotes the use of convenient and secure channels in the financial sector so the amount of money sent home could be mobilized for lending and other productive activities.