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Philippines: Reforms needed to keep remittances robust – ADB
MANILA, Philippines — The Philippines and other Asia-Pacific economies reliant on remittances must implement policy reforms and boost digitalization efforts to ensure that money sent from abroad will remain strong and resilient despite the pandemic, according to the Asian Development Bank (ADB).
In its latest blog, the ADB said remittances sustained their strong pace in the past two years, but reforms should be implemented to keep the “financial lifeline” robust in the years ahead.
While the pandemic has hit migrant workers since 2020, remittances proved to be resilient. In the Philippines, remittances slipped by less than a percent at the height of the pandemic.
ADB statisticians Stefan Schipper and Karen Frishan and communications specialist Sean Crowley said this is in response to greater economic need at home during the pandemic and a nod to the resilience of migrant workers.
“Remittances as a proportion of GDP (gross domestic product) rose in India, Bangladesh, Georgia, Pakistan, the Philippines, Bhutan, Azerbaijan and Kyrgyz Republic,” they said.
Data showed that the share of remittances to GDP inched up to 9.66 percent in 2020 from 9.33 percent in 2019.
“Altruism also played a role. In mid-2020, about 84 percent of over 3,000 overseas Filipinos from the UK, the US, Canada and Australia planned to send home the same amount or more money during the pandemic,” they said.
The Philippines remains heavily reliant on overseas remittances to boost household consumption, and its continued rebound is important for economic recovery.
Latest data showed that remittances increased almost four percent to $2.67 billion in April.
The Manila-based multilateral lender emphasized that the pandemic has highlighted the crucial role remittances play in Asia’s developing countries, particularly during crises, but it has also underlined many shortcomings.
The ADB experts noted that remittance prices across Asia vary, but all are above the Sustainable Development Goal global target of reducing the price to three percent of a transaction. However, informal remittances are particularly expensive, and some regulatory environments are too restrictive.
“Digitalization can help address some of these challenges. Sending and receiving countries should address regulatory and infrastructure barriers to facilitate digital transactions,” they said.
“Universal financial access in receiving countries and among migrant workers in sending countries is also very important in making remittances easier, cheaper and more widespread. Remittances are a financial lifeline for many families in Asia,” they added.
Source: https://www.philstar.com/business/2022/06/23/2190214/reforms-needed-keep-remittances-robust-adb