Money sent to the Philippines by migrants living in advanced economies, which forms a significant part of domestic output, will remain safe for now despite volatile conditions overseas.
This week, Greece became the world’s first advanced economy to default on loans from the International Monetary Fund (IMF). The cash-strapped nation joined the ranks of Sudan, Zambia and Peru as among the few that have failed to make payments to the Washington-based multilateral lender.
Vulnerabilities to the Philippines that might result from Greece’s economic collapse were limited, according to the Bangko Sentral ng Pilipinas (BSP).
Latest data showed that from January to March this year, remittances from Filipino workers in Greece amounted to $79.59 million, down 1.75 percent from $81 million in the same three months in 2014.
Remittances from Greece have been volatile. Cash transfers declined by 5.76 percent in 2012, before rising by 24.5 percent the year after. In 2014, Filipino workers in Greece sent home $335.45 million, up 3.62 percent year-on-year.
In contrast, growth in total remittances to the Philippines has been steady: 5.9 percent in 2014, 7.4 percent in 2013 and 6.3 percent in 2012.
Cash transfers from Greece also accounted for just 1.37 percent of the total at the end of March this year, down from 1.48 percent at the end of March last year.
BSP Deputy Governor Nestor A. Espenilla Jr. said the Philippine economy had few links to the beleaguered European state. For instance, local banks held no Greek assets, based on the central bank’s latest reckoning.
“Greece’s problems have been in the news for a while,” Espenilla said in an interview yesterday, noting that Philippine banks have had enough time to sell off Greek assets.
Diwa C. Guinigundo, deputy governor and head of the BSP’s monetary stability sector, said the Philippines remained “fundamentally capable” to withstand this latest challenge.
“Spillovers and contagion are expected to produce some volatilities but the Philippines’ strong buffers—including its robust external payments position and dollar reserves—should calm our local markets,” he told the Inquirer.