OFW inflows up 4.2% to $1.81 billion in June

MANILA, Philippines - Remittances from overseas Filipino workers (OFWs) reached $1.811 billion in June, up 4.2 percent from a year-ago level, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The latest figure brought the first semester tally to $10.128 billion, up 5.1 percent from last year’s level.

According to the BSP, the monthly growth was the slowest since March last year’s 4.1 percent. Nevertheless, six-month expansion was still better than the BSP’s five-percent target for the year.

“The sustained growth in the deployment of OFWs (overseas Filipino workers) was the key contributory factor to the upswing seen in remittance flows,” the BSP said.

“Another factor that helped shore up remittances was the continued expansion of bank and non-bank remittance providers that enabled the wider capture of a larger share of the global remittance market,” it added.

Citing data from the Philippine Overseas Employment Administration, BSP said approved job orders reached 472,261 as of July this year, 35 percent of which consisted of processed job orders for services, professional, technical and production related workers.

The statement said six-month remittances from land-based workers rose 2.8 percent to $7.8 billion, while those from seafarers increased 13.6 percent to $2.3 billion.

The US remains the leading source of remittances, accounting for 42.8 percent of the total, the statement said. It was followed by Canada (9.6 percent), Saudi Arabia (7.6 percent), Japan (five percent), United Kingdom (4.8 percent), Singapore (4.2 percent), and the United Arab Emirates (4.1 percent).

Prakriti Sofat, regional economist at Barclays Capital, said remittances would likely grow as BSP projected this year, giving the government enough reason to prepay offshore loans to tame the appreciation of the peso against the dollar, which has risen by 5.1 percent as of July this year.

“Note that more dollar inflow on a net basis puts appreciation pressure on the peso, so it is likely that the government will pay off some external liabilities ahead of schedule to offset dollar inflows related to sovereign bond issuance,” Sofat said.

The STAR yesterday reported the government is again looking at prepaying its external loans after shelving similar plans in late 2010. Prepayment will allow for dollar outflows, counterbalancing huge inflows which tend to make the peso stronger.

A strong local currency, while helps make imports become more affordable, causes Philippine products abroad to become more expensive, trimming export earnings. It also reduces the value of remittances earned from overseas Filipinos.