Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts

Volume IV,  Number 16              May 23 - 29, 2004            Quezon City, Philippines


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OFW Remittances Needed to Pay Foreign Debt, Offset Deficit

The government’s appeal to Middle East-based overseas Filipino workers (OFWs) to ignore the offer to work in Iraq in exchange for a higher pay may appear to be done in good faith. However, why is there no temporary ban on the deployment of OFWs there given the danger of working in the war-torn country?


The country’s continued dependence on OFW remittances may be seen in the Department of Labor and Employment’s (DOLE) recent call on the workers to ignore the offer to work in Iraq.

Last week, Labor Secretary Patricia Sto. Tomas appealed to Middle East-based OFWs not to accept the $800-monthly salary offer to work in Iraq, particularly as drivers. A worker in the Middle East normally gets $500 monthly. According to Sto. Tomas, “the biggest risk for our workers would be the roadside bombings…We know the pay is good but please do not do it.”

On the surface, the administration has the best interest in mind in issuing the call. However, the danger posed by just simply going to Iraq would have prompted the government to temporarily disallow the deployment of OFWs in the war-torn country, as well as pull out the Filipino troops currently stationed there.

For a Filipino family that needs to survive amid the high cost of living, $800 monthly translates to a gross income of PhP44,704 (based on an exchange rate of P55.88 per US dollar). This is almost equivalent to the monthly salary of the Philippine President (i.e., P50,000 or $894.77). While a worker may be literally committing suicide in taking on the job in Iraq, he or she is forced to do so given the need to provide for the family left in the Philippines.

Debts and deficits

The administration is also in the same rut as it engages in the never-ending deployment of Filipinos abroad for much-needed dollars to pay for the country’s foreign debt and offset the growing budget deficit.

Upon the start of the term of President Gloria Macapagal-Arroyo in 2001, the foreign debt was pegged at $51.9 billion. As of 2003, the country’s foreign debt amounted to $57.4 billion.

The foreign debt could actually reach $62.8 billion if the following were included:  inter-company accounts of Philippine branches of foreign banks, $2.0 billion; private sector loans without Bangko Sentral ng Pilipinas (BSP) approval/registration, $1.9 billion; and private sector obligations under capital lease agreement, $1.4 billion.

The accumulation of debt is partly due to the growing budget deficit which reached P199.9 billion ($3.6 billion) in 2003. The administration still expects the deficit to continue this year. For the first three months of 2004, the budget deficit stood at P56.8 billion ($1.0 billion).

The deficit in 2003 was mainly due to the administration’s poor revenue collection. In 2003, its revenues of P626.6 billion ($11.2 billion) were not enough to cover the expenditures which reached P826.5 billion ($14.8 billion). Incidentally, the interest payments for the country’s domestic and foreign debt constituted 27 percent of total expenses.

State of remittances

In this financial bind, the remittances of OFWs become a veritable source of income. In 2001, OFW remittances totaled $6.0 billion. Due to the continuous deployment of OFWs in recent years, the remittances reached $7.2 billion in 2003. This represents a 19 percent increase from the time Macapagal-Arroyo assumed power.

These statistics provide the answer as to why the administration only goes to the extent of discouraging workers from doing what they are wont to do just to provide for their families. Indeed, the situation of force majeure for those forced to eke out a living abroad works well for the cash-strapped administration.

Notwithstanding the appeal of the labor secretary, one cannot be blamed for speculating that this administration actually hopes that workers will bite the $800 monthly salary offer since this means more remittances in the years to come.

That is, if the workers survive…   Bulatlat.com

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