The OFW family or dependent receives the remittance in its peso equivalent. This is the general picture that most migrant Filipinos and their families know.
That is not the end of the story though. Remittances through formal channels are closely monitored by the Central Bank and multilateral financing agencies.
The inflow of remittances through formal channels are reported by all banks to the Central Bank, that in turn tallies this as part of the country dollar reserves ?the same reserves that are used to show the IMF, World Bank and other international funding agencies the country’s capacity to pay its debts.?
These dollar reserves are what the Philippine government uses as part of its collateral in getting new loans. The government cannot do without the remittances that go through banking channels. It would mean the loss of investor confidence and worsen the government long-term incapacity of possibly fully paying its international debts.
b. informal channels (door-to-door). This mode is actually an increasingly extensive network of informal money remitters that is also called the padala system. This system is based on personal couriers (usually friends and relatives) who deliver money door-to-door. In many cases, this mode is faster, cheaper and is more flexible with regard to time and proximity to OFWs and their dependents, especially in the urbanized areas of the
The inflow of remittances through informal channels, since these do not go through the banking system, are not monitored and tallied by the Central Bank. Thus, the US$8.5 billion remittance figure for 2004 and all Central Bank annual remittance inflow figures for that matter, only show a narrow part of the actual remittance figure.
Keeping the economy and government afloat
The World Bank and Asian Development Bank, in their respective surveys on OFW remittances in 2002 and 2003 have estimated the actual inflows of remittances to the Philippines as between US$14-21 billion per year.
These remittances that seemingly go straight to migrant Filipinos’ families and dependents and not into government hands are what keep the economy afloat.
When families and dependents get their remittances from both formal and informal channels, these are spent for survival. This generally fuels consumer spending and shores up the country dollar reserves.
Remittances are spent by families and dependents primarily for food, clothing, utilities (electricity, water, communications), house rent, children schooling, hospitalization and other services.
This is what 10 percent of the nation population living abroad does, due to the obscene lack of decent jobs at home.
Government and big business know that the economy is being saved by the remittances of the overseas workers, especially in the provinces.
The Philippines is not creating enough jobs for its swelling population, driving one in 10 people to seek employment abroad. The one million deployment target of the current administration and its doctored statistics on employment and job generation only serve to cover up the extreme deprivation and grinding poverty being experienced by our people.
The best and brightest minds, and the sturdiest work hands of our country are forced by the current government and current societal set-up to leave and suffer abroad. The loss of dignity and the humiliation that we suffer as a nation as stark reality as doctors become nurses, nurses and teachers become domestic workers, mothers and daughters end up as entertainers or get caught in the web of sex trafficking abroad.
This actually denotes that we are losing the capacity to really build a strong and vibrant economy as our human resources that are vital components in the production and service sectors go abroad.
Government is content with the present dispensation. But this is not going to be the case as labor markets, on the long term, will constrict as nations that import migrant labor reel in the world-wide economic crisis.
Reliance on remittances from labor export will not cure the ills of our economy. It only heightens the stakes of how hard the country will fall when the remittance flows fluctuate from the present increasing trend. Posted by Bulatlat
(Paper presented at the Outrage! Forum, Asian Center, University of the Philippines, Diliman, July 5, 2005)
Asian Development Bank 2004. Enhancing the Efficiency of Overseas
Workers Remittances. Technical Assistance Final Report, July 2004.
Asian Development Bank, Poverty in the Philippines: Income, Assets and
Access, Metro Manila, Philippines. January 2005.
Bangko Sentral ng Pilipinas
National Statistical Coordination Board
Philippine Overseas Employment Administration
World Bank Case Study on the Philippines, 2003.