Remittances via informal channels dip

MANILA, Philippines–Remittances sent through informal channels continued to decline, amounting to only less than 4 percent of total money from abroad.

According to Reynaldo David, president and chief executive officer of the Development Bank of the Philippines, this should be credited to the measures implemented by banks and remittance centers that make it easier for Filipinos abroad to send money to their relatives in the Philippines.

Informal channels include illegitimate remittance center, and friends of workers who are going back to the Philippines and are asked to give money to their relatives.

More than five years ago, remittances sent through informal channels used to account for 30 percent of total money sent by Filipinos abroad, central bank officials earlier said.

This kept banks and legitimate remittance centers from earning more from the remittance business. The BSP is discouraging the use of informal channels in sending money to the Philippines because authorities cannot properly record foreign exchange flows into the country.

David said many Philippine banks, including DBP, have been reducing remittance fees charged to OFWs over the years. Several remittance offices of banks and remittance centers have also been put up to make remittance services more accessible to OFWs.

Remittances are major contributors to the country’s economic growth. These account for about 10 percent of the economy, measured in terms of gross national product, and largely fuel household consumption.

David said DBP, which operates a remittance business, expects remittances to grow by 3.6 percent this year from last year’s $16.4 billion.

He said remittances are expected to sustain growth especially in the fourth quarter of the year, the time when Filipinos overseas send bigger amounts of money to their relatives in anticipation of the Christmas season.

In the first eight months of the year, remittances sent to the Philippines amounted to $11.3 billion, up 3.7 percent year-on-year.

The central bank expects growth in remittances to accelerate in the fourth quarter, especially because of the recent calamities that hit the country.

“When there are calamities, remittances normally increase because Filipinos abroad tend to increase the amount of money they send to their relatives,” BSP Deputy Governor Diwa Guinigundo said in a press briefing yesterday.

Guinigundo said remittances boosted growth of the economy in the third quarter, and would continue to accelerate in the fourth quarter.

In the first quarter, the economy, in terms of GDP, grew by 0.6 percent. In the second quarter, growth was recorded at 1.5 percent. –Michelle Remo, Philippine Daily Inquirer