By Rommer M. Balaba
Reporter
REMITTANCES from overseas Filipino workers (OFWs) could be a cheaper source of funds to finance priority infrastructure projects, compared to higher-tenor debt obtained from the international market, Socioeconomic Planning Secretary Romulo L. Neri said on Thursday.
OFWs and their families in general now enjoy a higher propensity to save, with more higher-paid professionals leaving for work abroad, which the government can take advantage of, added Neri, who is also director-general of the National Economic and Development Authority (Neda).
“OFW organizations have been inquiring about possible investment opportunities for their members. Hence, I suggest that the government tap this source of capital instead of borrowing from abroad,” the Neda chief said in an agency statement.
Money sent back home by overseas Filipinos through formal channels were up 14.8 percent as of May to $4.9 billion, and is expected to grow 10 percent this year from $10.7 billion last year.
An Asian Development Bank study noted, however, that actual remittances from more than 8 million Filipinos abroad could reach as much as $22 billion if those that go through informal means were also counted. The major sources of workers’ remittances are the United States, United Arab Emirates, Saudi Arabia, Italy, Hong Kong and Japan.
“This form of financing will further shift the nation’s credit exposure from foreign to local-denominated debt paper,” Neri said, although he noted that monetary authorities must first determine the most suitable vehicle in which to tap these funds.
The cost of borrowing for the Philippine government and local companies remains high in spite of a credit rating upgrade from ratings agencies whose opinions impact on the country’s ability to access the international debt market.
National income account estimates show the ratio of gross national savings to gross domestic product had consistently improved to 30 percent last year from 23 percent five years ago. Gross national savings include net inflows from abroad.
President Arroyo in her State of the Nation Address on Monday lined up core infrastructure projects for the planned Super Regions, which include road networks, roll-on roll-off facilities and airports.
Although the total cost of these projects has yet to be determined, Neri said it may call for new borrowings to support national government expenditures, local government funding and private sector resources.
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