New IMF method boosts OFW remittances in 2004 by $3B to $11.6B

Dollar remitttances from overseas Filipino workers (OFWs) reached a higher figure of $11.6 billion, instead of the earlier recorded $8.6 billion, in 2004, based on a new method of computation introduced by the International Monetary Fund (IMF).

The lower figure last year was due to the non-inclusion by the Bangko Sentral ng Pilipinas (BSP) of remittances that were coursed through the informal sector such as the padala and the door-to-door system, a monetary official explained.

Vicente Valdepenas, a member of the policy-making Monetary Board of the BSP, said that estimates of remittances not moving through the banking system is equivalent to 20 percent of total reported remittances, or in the vicinity of $3 billion last year.

"Following the fifth edition of the IMF Balance of Payments (BOP) manual, the BSP’s new computation shows total remittances reached $3.1 billion higher than that which was earlier reported in line with the international standard of recording OFW remittances set in the IMF manual," a report by the OFW Journalism Consortium said.

The OFW Journalism Consortium is a non-government organization working closely with OFWs domestically and internationally.

"That accounts for the bullish claims earlier made that remittances are forecast to reach over $14 billion in 2005," the group said.

The National Economic and Development Authority (NEDA) had forecast that foreign currency remittances from OFWs would hit $12 billion this year.

As of end-May this year, remittances expanded to $4 billion, almost 20 percent higher than the $3.3 billion level recorded in the same period in 2004.

There are an estimated eight million legitimate OFWs working or residing abroad as of end-2004, based on government reports. Reports from the World Bank indicate that the Philippines is the third largest source of OFW earnings, after China and Mexico.

Due to pressure from the World Bank, the Asian Development Bank and the IMF, the new computation broke away from the tradition of recording only those remittances that passes through banks.

Valdepenas said government has formed a task force to finalize the new system, reconcile the previous data, and make new reports.

The BSP has classified OFWs into sea-based, land-based performing artists (working on six-month contracts), and land-based workers considered non-resident "since they generally have a two-year employment contract."

Remittances from sea-based workers and the land-based workers performing artists fall under compensation income in the current account, while remittances of other land-based workers, as well as the gifts and donations from migrant Filipinos, fall under the current transfers item.

The BSP previously reported remittances as migrants’ gift and donations entirely separate from the remittances to migrants’ families. The latest data on the latter (called workers remittances) was in 2003 amounting to $218 million, the report said.