OFW remittances in August grew by 11.1%

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) Newsbriefs, a weekly digest produced by IDEA, Inc. to highlight the most recent national and international economic events, the remittances from the Overseas Filipino Worker (OFW) grew by a double-digit growth rate for the first time during the year in August 2011 to reach US$ 1.7 billion. The cash-transfers in August 2011 increase by 11.1 percent year-on-year. For the first eight months, the cumulative remittances rose by 6.9 percent to US$ 13 billion, with remittances from the land-based and sea-based workers growing by 5 percent and 14.4 percent respectively.

The top countries which are sources of the remittances are the US, Canada, Saudi Arabia, UK, Japan, United Arab Emirates, Singapore, Italy, Germany and Norway. These inflows represented 84.9 percent of the total remittances reported by banks. The number of processed for the first nine months of the year totaled 193,176 jobs. This is an increase of 8.6 percent from last year’s. Commercial banks’ continued effort to build up their network of business partners worldwide also contributed to the increase.

Furthermore according to the same published report, the Central Bank Chief said that the interest rates will likely remain unchanged this coming monetary board meeting on Thursday. He added that inflation remained manageable over the policy horizon, therefore the interest rates can be supportive of growth. BSP’s focus now is on growth not on inflation anymore.

Meanwhile, the Balance of Payments (BOP) in the month of September fell by 82 percent as funds flowed out from the emerging markets. The BOP surplus totaled to just US$ 719 million from the US$ 3.06 billion from the same month last year. The total nine-month BOP surplus in the first nine months of this year totaled US$ 9.7 billion from just US$ 6.7 billion from the same period last year. Furthermore, it was reported that the losses of Bangko Sentral ng Pilipinas surged by 24 percent to nearly Php30 billion in the first four months of this year due to lower revenues and an increase in expenses. Revenues sank by 32.5 percent to Php23.73 billion. Meanwhile, expenses surged by 37.3 percent to Php33.81 billion. Without foreign exchange (forex) fluctuations, BSP’s loss would have booked a smaller Php10.1 billion for the four-month period.

Lastly, the Philippine government buys back US$ 1.3 billion worth of high-coupon foreign currency bonds. According to a cabinet official, the successful repurchase signaled the country’s strong debt management and boosted the chances of credit upgrade. The offer last week involved high-coupon dollar and euro bonds maturing from 2013 to 2032 according to IDEA.

For comments, rejoinders and questions related to credit & collection, Mr. Ed F. Limtingco can be reached at [email protected].