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Financial lifeline

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The Philippines and other Asia-Pacific economies reliant on remittances were urged by the Asian Development Bank to consider implementing policy reforms and boost digitalization efforts to ensure that money sent from abroad remains strong and resilient despite the pandemic.

An ADB blog said remittances sustained their strong pace in the past two years, but reforms should be implemented to keep the “financial lifeline” robust in the coming years.

While the pandemic hit migrant workers, remittances proved to be quite resilient. In the Philippines, it slipped by less than a percent at the height of the pandemic, which was seen as a response to greater economic need at home during the pandemic and a nod to the resilience of migrant workers.

Data showed that the share of remittances to gross domestic product inched up to 9.66 percent in 2020 from 9.33 percent in 2019.

The Philippines remains heavily reliant on overseas remittances to boost household consumption, and its continued rebound is important for economic recovery.

The ADB emphasized that the pandemic has highlighted the crucial role remittances play in Asia’s developing countries, particularly during crises, but it also underlined many shortcomings.

ADB Experts noted that informal remittance prices are particularly expensive and some regulatory environments are too restrictive. As digitalization can help address those challenges, sending and receiving countries should regulatory and infrastructure barriers to digital transactions.

Universal financial access in receiving countries and among migrant workers can also make remittances easier, cheaper and more widespread, they added.

While the Philippines is making gains in terms of digitalization that can make it easier for remittances to be sent home by overseas Filipino workers, a lot of work remains to be done considering the scope and scale in the country, if the goal is universal and affordable financial access for both senders and receivers alike.

As much as we would like to see more OFWs go back home to their families for good, it will take a while before that can be possible, making our dependence on remittances a part of Filipino life in the foreseeable future. We have to make it easier and cheaper for our countrymen who depend on that.*

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