COVID-19 spike slowed remittances growth in February

BSP Gov. Benjamin Diokno. (File photo by EARVIN PERIAS / Philippine Daily Inquirer)

Personal remittances from overseas Filipino workers (OFWs) grew by just 1.2 percent year-on-year in February to reach $2.79 billion from $2.76 billion previously, slower than in January as yet another wave of COVID-19 infections rippled across the globe.

Of the February amount, about 90 percent or $2.51 billion accounted for cash funds transferred through the banking system—which the Bangko Sentral ng Pilipinas (BSP) calls as cash remittances.

This meant an increase of 1.3 percent from $2.48 billion in February 2021.

In February, fund transfers from land-based OFWs with contracts of at least one year reached $2 billion or 1.2 percent higher than $1.98 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 $501 million, an increase of 1.6 percent from $493 million.

The United States accounted for 42 percent of remittances received in February, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar,and Malaysia.

Easing restrictions

Combined with inflows in January, personal remittances totaled $5.76 billion, rising 1.9 percent from $5.65 billion in the first two months of 2021.

In March, BSP Governor Benjamin Diokno said the growth in personal remittances was expected to stabilize at 4 percent this year as well as in 2023.

This is the expectation after inflows increased by 5.1 percent to a record high of $34.88 billion in 2021, following an 0.8-percent contraction in 2020.

Diokno said the restoration of global growth with the easing of restrictions along with increasing vaccination rates and improving jobs market could contribute to domestic recovery.

Also, Diokno said the strong outlook for remittances would enable the Philippines to address its ballooning debt stock.

As of the end of February, the national government’s debt stock was pegged at P12.09 trillion or about 60 percent of gross domestic product (GDP). Of the total, 30 percent or P3.68 trillion was borrowed from foreign lenders.

The BSP chief said the Philippines’ debt-to-GDP ratio was much lower than that of other countries, where the ratio ranges from 100 percent to more than 200 percent.

He added that the country’s gross international reserves remained ample—equivalent to 9.6 months worth of imports as of the end of March, better than the three months worth, which is considered sufficient. INQ