Remittances down 8.3% in September

Cash sent back home through banks by Filipinos working and living abroad declined 8.3 percent year-on-year to $2.186 billion in September partly due to the closure of a number of overseas money service providers, the Bangko Sentral ng Pilipinas reported Wednesday.

The latest BSP data showed that cash remittances last September dropped from $2.383 billion in the same month last year, as well as the lowest inflow in five months or since April’s $2.083 billion.

The inflows nonetheless stayed above the $2-billion level for the 20th straight month.

BSP data showed that the year-on-year decline posted in September was the fastest since the 10.9-percent drop posted in April 2003.

In a statement, BSP Governor Nestor A. Espenilla Jr. blamed the lower September remittances figure to “the 11.7-percent drop in cash remittances from land-based workers which offset the 6-percent increase in transfers from sea-based workers.”

“There are reports that a number of global correspondent banks have closed their service facilities on money service business, reflective of the increasing global trend to reduce correspondent banking relationships and focus more on home market. This may have partly affected remittances flows during the month,” Espenilla explained.

Espenilla said the largest drops in cash remittances that month were recorded from Saudi Arabia, Kuwait, Qatar and Australia.

“For Saudi Arabia, the decline in remittances could partly be the result of the continued repatriation of overseas Filipino workers under the Saudi Arabian amnesty program which started last March. On Sept. 26, the Saudi government extended the amnesty program anew and a total of 8,467 undocumented Filipinos already availed of the initial offer, according to the Department of Foreign Affairs,” Espenilla noted.

From January to September, cash remittances reached $20.781 billion, up 3.8 percent from $20.025 billion in the same nine-month period last year.

As of end-September, “cash remittances from land-based and sea-based workers grew by 3.8 percent and 3.5 percent to reach $16.4 billion and $4.4 billion, respectively,” according to Espenilla.

The top sources of cash remittances at end-September were Germany, Hong Kong, Japan, Kuwait, Qatar, Saudi Arabia, Singapore, the United Arab Emirates, the United Kingdom and the United States, with these 10 countries accounting for almost three-fourths of the nine-month total.

Cash remittances are projected to hit a record $28 billion by yearend.

The BSP had kept the 4-percent remittances growth target for 2017, although the value of the updated projection made in June was higher than the earlier forecast of $27.7 billion.

Last year, cash sent home by overseas Filipinos through banks reached a record-high $26.9 billion, 5-percent higher than 2015’s $25.6 billion.

Remittances are the country’s largest source of foreign exchange income, insulating the domestic economy from external shocks by ensuring the steady supply of dollars into the system.

Also, these cash transfers are a major driver for domestic consumption, hence contributing to strong economic growth. /je