BSP WANTS FURTHER CUTS IN REMITTANCE FES
MANILA, DECEMBER 28, 2009 (STAR) Lawrence Agcaoili - The Bangko Sentral ng Pilipinas (BSP) is set to push for the further reduction of remittance fees this year to help advance the welfare of the families of Filipinos working overseas.
BSP Governor Amando M. Tetangco Jr. said money sent home by Filipinos abroad play a major role in supporting the economy that was affected by the global economic slump.
“Total remittances account for 10 percent to 11 percent of the economy. So it’s a major sector,” Tetangco stressed.
He explained that one of the benefits that overseas Filipino workers’ remittances bring is basically the availability of more foreign exchange to finance the dollar requirements of the economy.
He added that OFW remittances also boost the purchasing power of the beneficiaries of Filipinos abroad, driving economic activities including manufacturing, services, and others.
Instead of a zero growth, the BSP sees OFW remittances increasing by four percent to a record $17.1 billion this year from $16.4 billion last year. Next year, the central bank sees the amount of money sent home by Filipinos abroad rising by another six percent.
Latest data released by the BSP showed that OFW remittances climbed by 4.5 percent to $14.321 billion from January to October this year compared with $13.707 billion in the same period last year.
This after the amount of money sent home by Filipinos abroad reached a new monthly record high of $1.531 billion in October, surpassing the previous record monthly level of $1.498 billion recorded last June due to higher transfers to help beneficiaries rebuild the damages caused by the recent natural calamities.
Tetangco said the BSP has signed a memorandum of agreement with member banks of the Association of Bank Remittance Officers Inc. (ABROI) to bring down the cost of remittances.
“To help advance the welfare of overseas Filipinos, we will continue to work for a further reduction in bank remittance fees, even as we had just recently signed an agreement with the ABROI,” the BSP chief stressed.
Under the agreement, member banks would be allowed to use the central bank’s Philippine Payments and Settlements Systems (PhilPaSS) to send the remitted money to the beneficiaries’ accounts in other banks.
OFW families are expected to save at least P92 million to as high as P922 million due to the faster and cheaper delivery of remittances to the beneficiaries at a lower rate of P50 per transaction instead of the current range of between P100 and P550 per transaction.
Yearender: Teves feels like going through hell in 2009 due to RP's budget woes By Iris C. Gonzales (The Philippine Star) Updated December 28, 2009 12:00 AM
MANILA, Philippines - How do you keep sane when money flies out of the window and the bills just keep on coming? You look at your wallet and see nothing in it and then you count silently when the next paycheck would come and you realize instantly that you have a shortfall. It’s difficult and almost impossible but more so if we’re talking about the need for billions and billions of pesos.
The amount of P272.5 billion is no joke. And that is the government’s budget deficit as of end-November 2009.
That is exactly why Finance Secretary Margarito Teves feels like he is “going through hell.” And it’s exactly the reason why he has decided to reject calls for him to run for public office again in 2010 as senator.
The Philippines is facing a widening budget deficit and even as fiscal authorities already revised the 2009 budget deficit target three times this year, the yearend figures look nowhere near the last revised program of P250 billion.
Originally, the government had a budget deficit ceiling of P102 billion or 1.2 percent of the country’s gross domestic product for 2009.
However, on Feb. 25, the government changed the target to P177.2 billion or 2.2 percent of gross domestic product (GDP) because of the need to spend and cushion the economy from the impact of the global financial turmoil.
In April, the government changed this anew to P199 billion given the increasingly difficult economic conditions. It was also during this period that the government had lost hopes of balancing the budget by 2010 and announced a new balanced budget schedule of 2013.
It was also during this time that the Development Budget Coordination Committee (DBCC), the interagency group that sets the country’s macroeconomic assumptions and targets, revised anew its economic growth projections for 2009.
Originally, the DBCC’s growth projection for the year was 3.7 percent to 4.7 percent. The committee changed this to 3.7 percent to 4.1 percent and then eventually to 3.1 percent to 4.1 percent.
Still, due to the lingering impact of the global financial crisis, the DBCC ended with a revised growth target for the year of 0.8 percent to 1.8 percent.
Augusto Santos, acting director-general of the National Economic and Development Authority (NEDA), is optimistic the government can hit at least the lower end of the revised target.
For the economy to grow by at least 0.8 percent for the year, it needs to expand by at least 0.9 percent in the fourth quarter, which Santos said is achievable.
“It will be driven by Christmas spending and early election spending,” Santos said.
Nevertheless, a 0.8 percent to 1.8 percent growth range is still much slower than expected. As such, government economic managers revised the budget deficit anew. It deemed that the government needed to spend to stimulate the economy.
The budget deficit revisions in February and April were deemed not enough due to the slow economy.
A slow economy cuts down the government’s tax collections because there is less business activity and imports are lower.
As such, on June 10, the government revised for the third time the deficit gap to P250 billion, stressing that it needed to spend more because of the lingering impact of the global financial turmoil.
However, when the months of September and October came, two major typhoons — Ondoy and Pepeng — hit the country and left the government with a heavier burden as it needed to spend on reconstruction and rehabilitation efforts.
This development prompted the government to convert the yearly Philippine Development Forum into a pledging session from the usual assessment of development goals and perennial social concerns.
During a meeting early this month, Philippine government officials opened doors for a pledging session with the donor community and members of the private sector to raise a whopping $4.4 billion or P207 billion from 2009 to 2012 for post-typhoon reconstruction and recovery efforts.
The P207 billion latest estimate of the damage and losses caused by typhoons Ondoy and Pepeng include the losses incurred by the private sector and not just the government. The amount represents 2.7 percent of the country’s gross domestic product.
The government received a pledge of $3 billion or P141 billion worth of mostly concessional loans or loans which are significantly cheaper compared to commercial borrowings.
While the government has yet to release the actual breakdown of the donors and the type of loans that make up the $3 billion, Teves said the bulk of the amount would come from the Asian Development Bank (ADB). Other sources are the World Bank, United Nations and the Japanese government.
Huge as the amount of pledges may seem, however, Teves said these are still just pledges and the government still needs to immediately and regularly shell out funds for various needs.
This inevitable need to spend, against a backdrop of weak revenues, widened the government’s budget deficit to P272.5 billion as of end-November, more than four times the P66.7 billion incurred in the same period last year.
In November alone, the deficit hit P6.4 billion, P2.1 billion higher than the P4.3 billion deficit incurred during the same month last year.
The end result of this is that the government is now looking at an emerging deficit of about P300 billion this year, P50 billion more than the last revised program for 2009 of P250 billion.
This developed as revenues remained weak. During the 11-month period, revenues reached only a total of P1.021 trillion, down by 5.5 percent from the comparative period last year of P1.081 trillion.
Of the amount, the Bureau of Internal Revenue (BIR), the government’s main revenue earner, collected P681.9 billion, also 5.5 percent lower than theP721.6 billion collected a year ago.
Similarly, the Bureau of Customs (BOC), the government’s second-largest revenue office, generated P201.4 billion, 16.6 percent lower than the P241.5 billion recorded a year ago.
Against this backdrop of weak revenues, the government has had to spend more. As such, expenditures from January to November rose by 12.7 percent to P1.294 trillion from P1.148 trillion disbursed in the same period last year.
As if adding insult to injury, the government is also having problems because of various revenue-eroding measures approved in Congress.
These so-called revenue eroding measures are estimated to cost the government P60 to P65 billion yearly. These measures include the lowering of the corporate income tax rate to 30 percent from 35 percent which is expected to translate to revenue losses of P15 to P20 billion yearly.
Another measure is the Minimum Wage Law which exempts minimum wage earners from income taxes. The government expects to incur losses of roughly P26 billion a year from this measure.
The National Tourism Act, meanwhile, is estimated to translate to P3 billion in foregone revenues.
Another measure, the imposition of franchise tax on power transmission in lieu of all national and local taxes, is expected to leave a dent on state coffers amounting to P9 billion a year.
The so-called Personal Equity Retirement Account (PERA) Act of 2008, a tax-free pension scheme for retiring individuals, is estimated to cost the government P7 billion yearly.
Fiscal authorities are looking at 2010 with fervent hope that by some miracle and a good dose of luck, fresh revenues would come in.
Teves is appealing to Congress to junk revenue-eroding measures that are still pending.
If this is not possible, the Finance chief expressed hopes that lawmakers would pass a corresponding revenue-enhancement measure for every revenue-eroding measure that is approved.
“We hope that for every one peso that will be lost, there will be one peso that will be generated,” Teves said.
As there is no assurance yet of fresh revenues in 2009, the government expects next year’s deficit to be above the programmed P233.4 billion but below the emerging P300 billion deficit for 200
The country’s fragile fiscal position has been a perennial problem for the government.
But while fiscal authorities are looking into the global financial turmoil as the major culprit, the private sector has also been calling their attention on the rampant corruption in the BIR and the BOC which has also been a major reason for revenue shortfalls.
Fiscal authorities insist they are addressing this problem through regular lifestyle checks among employees of the BIR and the BOC.
How all these problems will be addressed remains to be seen.
Chief News Editor: Sol Jose Vanzi
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