BANGKO Sentral ng Pillipinas Deputy Governor Diwa Guinigundo said the country’s external payments position will remain strong as robust business process outsourcing revenues offsset slowing remittances from migrant Filipino workers.
Guinigundo made the assessment after Bangko Sentral data Thursday showed that money sent home by migrant Filipino workers in July fell 5.4 percent to $2.13 billion from $2.253 billion a year ago.
It was the biggest decline in eight months or since the 6.2-percent fall in November last year. However, cash remittances in the first seven months still grew 3 percent to $15.323 billion from $14.87 billion on year.
“We are seeing the continuing narrative of derisking, upsetting the otherwise normal flow of remittances. In fact, even the Arab Monetary Fund, International Monetary Fund and the World Bank have documented various cases of derisking in the Middle East jurisdictions,” Guinigundo said over the weekend.
He said what exacerbated the situation was the weak oil prices in the global markets, dampening the propensity of Saudi Arabia, the United Arab Emirates, and other oil-producing markets to provide jobs to Filipino overseas workers.
“While there is a likelihood that this might continue and affect (overseas Filipino workers) remittances this year, the more than 18-percent growth in BPO revenues for the first six months of 2016 could somehow cushion the soft remittance flows,” Guinigundo said.
Remittances and BPO revenues provide steady inflows which boost private consumption. Together, these account for nearly $50-billion worth of inflows every year.
Guinigundo said earlier that derisking or the closure of the accounts of some banks abroad was heightened by anti-money laundering concerns, counter-terrorism and cybercrimes. He said derisking was already occurring even before the $81-million money laundering scam broke out in the country in February this year.
He said Bangko Sentral was not worried but the issue remained a concern, prompting the regulator to continue monitoring because a large part of the country’s external payments position continued to depend on the level of remittances.
Data showed that the 5.4-percent decline in remittances in July was also triggered by lower deployment of skilled workers abroad.
Preliminary report from the Philippine Overseas Employment Administration showed that the number of deployed land-based workers dropped 10.3 percent in the first seven months to 235,895, while that of sea-based workers fell 44.4 percent to 134,360.
About 80 percent of cash remittances in July came from the United States, Saudi Arabia, UAE, Singapore, the United Kingdom, Japan, Qatar, Kuwait, Hong Kong and Germany.
Personal remittances, which include non-cash items, declined 5.4 percent in July to $2.35 billion from $2.49 billion a year ago. The figure brought personal remittances in the first seven months to $16.92 billion, still up 2.9 percent from $16.44 billion in the same period last year.