Central bank remains confident on OFW inflows

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Central bank remains confident on OFW inflows
Posted: 0:14 AM Jun. 22, 2006
Doris C. Dumlao
Inquirer

THE central bank, Bangko Sentral ng Pilipinas (BSP), expects money inflows from overseas Filipino workers (OFWs) to grow 10 percent, in line with target, despite a recent slowdown, BSP Governor Amando Tetangco said.

"We're keeping the 10-percent target. We're still confident," Tetangco told reporters after data showed OFW remittances grew by a mere 0.34 percent in April, the first slowdown in 17 months.

Tetangco said the cumulative remittance level of $3.7 billion from January to April still posted a double-digit growth of 10.8 percent from the same months last year.

UBS Securities analyst Philip Wyatt said the slowdown in April was mostly a seasonal dip. "The main seasonal pattern is a fall in March to April and a rise November to December, though they vary in magnitude," he said.

"Two factors acting as a drag on growth of remittances are the base in 2005, which was especially high, and the lower number of deployed overseas workers, which in January to April dropped by 2.7 percent," Wyatt said.

He said OFW money inflows would still likely hit $11-$12 billion this year, compared with $10.7 billion in 2005.

Tetangco said the BSP was encouraging OFW families to save part of their remitted incomes in banks or engage in business.

According to a BSP survey of households in Metro Manila, only 11 percent of OFW families attempt to invest in the stock market or engage in business. A larger 39 percent kept savings in banks and other depository institutions.

About 10 percent of households in Metro Manila have at least one OFW, the survey showed. Of these families, 91.3 percent received remittances in the past 12 months.

The survey also showed that nearly all -- 95.5 percent -- of the households used part of the remittances to buy food and pay for other domestic expenditures.

Tetangco said, "We've been coordinating with the banks, so the banks can offer financial products that the OFWs and their families can buy or participate in. That's for one group of OFWs that are not prepared to engage in business."

"We want to see more OFW families putting a part of the remittances in banks or financial products," he said. "For those that don't have the inclination or the time to manage their investment, the bank will basically manage that for you. That's also good because there will be more resources for banks to invest in productive activities."

Tetangco said the banking system was also ready to support OFW families with entrepreneurial talent.

"We can tie this up with microfinance so let's say if somebody has a certain amount of capital but would need additional, he can go to a bank and borrow, either under a microfinance program or those with bigger requirements tap SME [small and medium-scale enterprise] lending," he said. With INQ7.net