Gov’t out to unlock vast potential of remittances
MANILA, Philippines–The Government hopes to increase the multiplier effect of remittances on the economy which, in turn, may help reduce poverty incidence in the country.
According to Amando Tetangco Jr., Bangko Sentral ng Pilipinas (BSP) governor, the best way remittances can help fuel growth of the economy is for the recipients to use the money for investments—by putting up micro or small enterprises or securing portfolio instruments.
Although more Filipino families are now investing the cash sent in by friends and family members working abroad, their proportion to the total number of remittance-dependent households is still small at less than 10 percent, the central bank said.
Most households still use bulk or all of the money they receive for consumption.
Tetangco said that currently, remittances from overseas Filipino workers (OFWs) are already a significant source of growth, serving to boost household consumption, described to be a key driver of the economy.
But by using remittances for productive activities and not just for consumption, the money will go a long way in fueling economic growth, he explained.
The central bank chief said that, by teaching OFW households how to invest the money they receive, they would not only improve their income, they would also help accelerate growth of the economy.
Remittances to the Philippines last year amounted to $20.1 billion, rising by 7.2 percent from the $18.8 billion reported the previous year.
The Philippines is the fourth biggest recipient of remittances after China, India, and Mexico.
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