Money sent home by Filipinos working overseas dropped 8.3 percent in September from a year ago, pulled down by lower remittances from land-based workers and the closure of some global correspondent banks of their money service facilities.
Data from the Bangko Sentral ng Pilipinas showed that cash remittances declined to a five-month low of $2.186 billion in September from $2.38 billion a year ago. They were also lower than $2.499 billion registered in August this year.
The 8.3-percent year-on-year decline in August was the steepest since the 10.9-percent fall recorded in April 2003.
“This was attributed to the 11.7-percent drop in cash remittances from land-based workers which offset the 6-percent increase in transfers from sea-based workers,” the Bangko Sentral said in a statement.
“There are reports that a number of global correspondent banks have closed their service facilities on money service business, reflective of the increasing global trend to reduce correspondent banking relationships and focus more on home market. This may have partly affected remittances flows during the month,” the regulator said.
The countries that registered the biggest declines in cash remittances in September were Saudi Arabia, Kuwait, Qatar and Australia.
“For Saudi Arabia, the decline in remittances could partly be the result of the continued repatriation of overseas Filipino workers under the Saudi Arabian Amnesty Program which started last March 2017,” the Bangko Sentral said.
The Saudi government on Sept. 26, 2017 extended the amnesty program anew and a total of 8,467 undocumented Filipinos already availed of the initial offer, the Department of Foreign Affairs said earlier.
Cash remittances coming from the United States, Saudi Arabia, United Arab Emirates, Singapore, Japan, United Kingdom, Qatar, Kuwait, Germany and Hong Kong comprised about 72 percent of total cash remittances in the first nine months.
Cash remittances in January to September reached $20.781 billion, up 3.8 percent from $20.025 billion in the same period last year.
Personal remittances, which include non-cash items, also posted its lowest value in five months at $2.442 billion, down 7 percent from $2.626 billion a year ago. This brought personal remittances in the first nine months to $23.164 billion, up 4.8 percent from $22.108 billion on year.
Personal remittances from land-based overseas Filipinos with work contracts of one year or more including other household-to-household transfers rose 5.1 percent to $18.4 billion in the nine-month period, while those from sea-based and land-based Filipinos with work contracts of less than one year increased 3.5 percent to $4.8 billion.
Data from the Philippine Overseas Employment Administration earlier showed that the total number of deployed Filipino workers reached 1,222,003 in January to July this year, which was about 58 percent of the total number of workers deployed for 2016 at 2,112,331.
The Bangko Sentral is keeping a conservative 4-percent growth target for remittances this year.
Bangko Sentral Deputy Governor Diwa Guinigundo said the 4-percent expansion would translate into a record $28 billion value of remittances this year, up from $26.9 billion posted in 2016.
Remittances together with business process outsourcing receipts account for around $50 billion inflows annually and have been the source of the country’s strong external payments position.
The $26.9 billion total value of remittances last year accounted for around 10 percent of GDP, which grew 6.9 percent in the same period, making the Philippines of the fastest growing economies in the region.
Guinigundo said “global growth this year is seen at 3.5 percent, higher than the 3.1 percent in 2016,” which would augur well for the sustained demand for Filipino workers abroad and eventually the flow of remittances back home.
DBS Bank of Singapore said in a report that remittances remained strong this year despite earlier concerns about domestic policies taking shape in key host countries such as the US and Saudi Arabia. The bank said “at the current pace, total foreign remittances are going to reach a new record of circa $28 billion this year.”