Impact of Overseas Filipino Workers Income to the Economy

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government can make a stand in its debt servicing. Total debt service is the sum of principal repayments and interest actually paid in foreign currency, goods, or services on long term debt, interest paid on short-term debt, and repayments or repurchases and charges, to the International Monetary Fund (IMF). A rise in peso can help lessen the debt, since the country’s debts are mostly in US Dollars. Like what was mentioned in the earlier paragraph, higher GIR can defend peso against other currencies. A rise in our local currency will result to the lower value of other currencies. With higher levels of reserves, there will be a higher appreciation of peso and inflation will be kept on-check.

But does their impact stop there? As always, there is a flip side to such a golden story.

According to journalist Iris Cecilia Gonzales, “working abroad is no paradise because [OFWs] are separated from their children.” And while the social cost is high, the developmental cost is higher. Prod Laquian, professor at the University of British Columbia, says “the export of workers has prevented the Philippines from advancing as a self-sustaining nation… For the [Philippine] government, the easy money from foreign remittances is a major cause of its inability to pursue sound economic development programs.”

Applauding positive contributions by OFWs is wonderful. More challenging is how to broaden the Philippines’ domestic industrial base to absorb those OFWs yearning for job opportunities at home, and at no further cost to their personal lives.

ANALYSIS

STRENGTHS

OFW remittances props up the country’s macro-fundamentals. The rise of remittances in the Philippine economy produces a favorable impact on the country’s balance of payments, bolstering the surpluses on current accounts. The steady inflow of remittances enables the country to buy more foreign goods and services. This also means that it is now in a more comfortable position to service its external debt and other international obligations. With this comes the recognition that the nation’s finances have improved.

Foreign remittances are the Philippines’ second largest source of foreign reserves, after e