FINANCIAL ROADSHOW BANKS ON WORKERS
INVESTING IN SECURITIES, MONEY MARKET INSTRUMENTS
By Jun Vallecera
Reporter
THE increasing number of financially literate overseas Filipino workers has pulled up the country's low savings rate from the dumps, the Bangko Sentral ng Pilipinas said on Tuesday.
The increase has turned around the lives of most Filipinos and has given meaning to the reported increase in macroeconomic numbers, deputy BSP governor Diwa Guinigundo said.
"More of our overseas workers have been investing in government securities, money market instruments and other forms of saving and this rise we noted in 2006. As a result, the national savings rate has risen," he said.
Guinigundo said the national savings rate already stood at 30 percent of local output or the gross domestic product in 2005, a vast improvement from the low 20s rate noted some five years earlier.
Many in government regard the country's savings rate as rather low given the 48 percent savings rate or even higher posted by neighbors in the region.
Guinigundo insisted the numbers have changed, saying the increasingly financially sophisticated OFW, with help from the BSP's financial literacy campaign, have set aside more and more of their overseas earnings for investment purposes rather than splurge them all in meaningless consumption.
"This is relatively low compared to Asia but this has grown over the years," he acknowledged in a text message. He earlier debunked the usual notion about the low savings rate in an interview with DWIZ's morning talk show "Karambola."
The National Statistical Coordination Board (NSCB), which gathers the data, reports on it only once a year and there is none yet for 2006, the BSP official added.
Most economists and social commentators are hard put explaining the relevance of the supposedly improving macroeconomic environment and its impact on the lives of ordinary Filipinos.
Guinigundo said the fiscal sector's success in turning around its finances by lifting sector exemptions and raising the value-added tax rate from 10 percent to 12 percent has allowed the government to trim its spending excesses and reallocate the savings for the delivery of critical social services.
Department of Finance numbers validate Guinigundo's views, with Finance Secretary Margarito Teves having earlier reported saving some P31 billion worth of state resources from interest expense alone in the first 11 months.
He said the savings was made possible by the low interest rate regime—which in turn was made possible by a government with less compulsion to borrow than ever before.
The easing pressure on state finances has similarly brought down the government's borrowing costs, and enticed more foreign and local entrepreneurs to come and invest.
Guinigundo, in the interview with Karambola, said the new investments translate to job generation and income for more Filipinos, more taxes for the government and higher levels of productivity for the economy as a whole.
The connection is not easily apparent but Guinigundo said these are the tangible "fruits of economic growth."
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