Remittances shrink in September

MANILA, Philippines — Remittances from Filipinos abroad declined to a five-month low in September due to the repatriation of undocumented Filipino workers in Saudi Arabia as well as the decision of global correspondent banks to shut down more money service facilities.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday personal remittances contracted seven percent to $2.44 billion in September, the lowest since April when it reached $2.32 billion. This was the biggest monthly contraction for personal remittances, exceeding the 6.2 percent decline in November 2014.

For the first nine months, personal remittances, which measures cash and non-cash items that flow through both formal or via electronic wire and informal channels such as money or goods carried across borders, went up 4.8 percent to $23.16 billion from $22.11 billion in the same period last year.

The central bank also reported cash remittances coursed through banks fell 8.3 percent to $2.19 billion in September, the biggest decline since contracting 10.9 percent in April 2003 and the lowest level since April when it amounted to $2.08 billion.

Saudi Arabia led the list of countries which registered the biggest drop in cash remittances in September as a result of the continued repatriation of Filipino workers under the Saudi Arabian amnesty program that started last March.

The Department of Foreign Affairs (DFA) said a total of 8,467 undocumented Filipinos have availed of the amnesty program.

Cash remittances inched up 3.8 percent to $20.78 billion from January to September, compared to $20.02 billion in the same period last year.

Data showed 72 percent of the cash remittances during the period came from the US, Saudi Arabia, United Arab Emirates, Singapore, Japan, the United Kingdom, Qatar, Kuwait, Germany and Hong Kong.

Global banks continued to withdraw their corresponding banking relationships with local banks as part of de-risking efforts amid the changing regulatory and supervisory environment particularly the anti-money laundering and combating the financing of terrorism (AML/CFT) rules.

“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 central bank said.

Global banks have closed more than 100 accounts of money transfer operators in 15 countries including the Philippines.

Despite the continued strengthening of the dollar against the local currency, both personal and cash remittances declined in September. The peso has emerged as the worst performing currency in the region, losing almost three percent of its value and continues to trade above the 51 to $1 level.

ING Bank Manila senior economist Joey Cuyegkeng said the weakness of the peso has resulted in a 17 percent increase of the peso value of remittances.

For the third quarter alone, he said the peso value of remittances was 16 percent higher year-on-year or double the pace seen in the same quarter last year.

For 2017, the BSP has set a four percent growth target for remittances.