The inflow of US dollars from overseas Filipino workers (OFWs) started the year with a 2.5-percent year-on-year growth, reaching $2.97 billion in January from $2.9 billion in the same month last year.
Preliminary data at the Bangko Sentral ng Pilipinas (BSP) show that inbound personal remittances turned around from a 1.7-percent decrease in January 2021, although still far from the 7.3-percent growth registered in January 2020, in the runup to the declaration of the pandemic two years ago.
Earlier this month, BSP Governor Benjamin Diokno said the growth in inflows was expected to stabilize at 4 percent this year after a 5.1-percent jump in 2021 that followed a 0.8-percent contraction in 2020.
In 2021, full-year remittances reached a new record at $34.88 billion, which puts the BSP’s forecast for 2022 at about $36.28 billion.
Diokno said the restoration of global growth with the easing of restrictions in many jurisdictions along with increasing vaccination rates and improving the jobs market could contribute to domestic recovery through improvements in exports and remittances.
Dollar for debt payments
On Wednesday, Diokno said in a panel discussion that the strong outlook for remittances will help the Philippines address its ballooning debt stock. He was one of the panelists at the opening plenary of the two-day Southeast Asia Development Symposium 2022, which is organized by the Asian Development Bank (ADB).
In January, fund transfers from land-based overseas Filipino workers with contracts of at least one year reached $2.28 billion or 2.9 percent higher than $2.21 billion in the same month last year.
At the same time, other OFWs—both based on land and at sea, but with contracts of less than one year—sent $617 million, an increase of 1.2 percent from $609 million.
Of total remittances, cash that OFWs sent through banks reached $2.67 billion in January, higher by 2.5 percent than the $2.6 billion sent in a year before.
Remittance sources
The United States accounted for 41 percent of remittances received in 2021, followed by Singapore, Japan, Saudi Arabia, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar and Malaysia.
At the ADB symposium, Diokno said ample foreign exchange inflows from OFWs— long with other external sources—places the Philippines at a secure position to service its foreign debts.
As of the end of January, the national government’s debt stock was pegged at P12.03 trillion of 61 percent of gross domestic product (GDP). Of the total, 30 percent or P3.7 trillion is borrowed from foreign lenders.
“We can pay our debts by [having the economy] outgrow our debts,” Diokno said. “This year we expect [GDP] to grow at 7 percent to 9 percent. Our debt may grow by 2 percent or so.”
The BSP chief said the Philippines’ debt-to-GDP ratio at 61 percent was much lower than that of other countries, where the ratio ranges from 100 percent to more than 200 percent.
“Whenever there is a crisis in the Philippines, we run out of foreign exchange [reserves] to service our foreign debt,” Diokno said, describing the country’s past troubles with dollar shortages. “That’s no longer the case.”