CUTTING remittance costs and expanding the available channels for sending money back home to the Philippines holds the potential for raising economic growth, the Research Academy of the Bangko Sentral ng Pilipinas (BSP) said.
BSP Research Academy Officer II and Research Associate Carl Francis C. Maliwat said money remitted by overseas Filipino workers must be leveraged to maximize its impact.
“Because remittances remain a crucial source of funding for the Philippine economy, we really must consider how to optimize the use of remittances to fuel further economic growth,” he said in a virtual event on Wednesday.
Mr. Maliwat recommended classifying remittances as an essential service and building scale in the industry.
“First, we declare the provision of remittances as an essential financial service. Second, we support the development and scaling up of digital remittance channels to migrants and families through fintech and digital modes,” he said.
He said the government should continue its efforts to reduce remittance costs and promote competition in the market.
“We can also consider the development of interventions such as to enhance the payments and settlement system, improve access to financial services by promoting the use of the internet and of mobile technology, and to cultivate financial education among overseas Filipinos and their beneficiaries,” he said.
Remittances sent through banks rose 2.6% year on year to $2.99 billion in July. This was the highest total in seven months or since the $3.16 billion in December.
In the first seven months, cash remittances rose 2.9% to $18.79 billion.
The US remained the biggest source of cash remittances, accounting for 41.3%. It was followed by Singapore (6.9%), Saudi Arabia (5.9%), Japan (5%) and the UK (4.8%).
The BSP expects remittances to grow 3% this year.
Mr. Maliwat said the pandemic had a negative and significant impact on remittances, causing lingering effects on the rest of the economy.
“But — and this is crucial — we have found this effect to be temporary. Nevertheless, we find that shocks to remittances will spill over to the rest of the economy. And while the shock to remittances is temporary, the spillover effects may not necessarily be so,” he said. — Keisha B. Ta-asan