BSP gauges risks of US visa ban on OFWs

The Bangko Sentral ng Pilipinas (BSP) is assessing the impact on remittances of the one-year ban imposed by the US on the grant of two types of work visas to Filipinos starting last month.

BSP Deputy Governor Diwa Guinigundo said the ban could affect both jobs and income of overseas Filipino workers and consequently personal remittances.

“To what extent, this is something we are looking into right now. It’s very difficult to ascertain in the absence of more granular data,” he said in a text message.

DBS economist Masyita Crystallin said the deceleration of remittance flows could serve as another potential headwind to consumption.

She said remittances could drop further due to the ban on the issuance of H-2A/H-2B work visas to Filipino workers.

The US Department of Homeland Security (DHS) issued a notice last month that the Philippines had been dropped from the list of countries eligible for H-2A/H-2B work visas.

The removal was due to concerns over human trafficking and overstaying raised by the US government.

H-2A visas are given to foreign agricultural workers in the US, while H-2B visas are granted to skilled and unskilled workers.

Latest data showed personal remittances consisting of 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 rose by nearly three percent to $29.06 billion from January to November last year compared to $228.24 billion in the same period in 2017.

Likewise, cash remittances coursed through banks went up by 3.1 percent to $26.09 billion from $25.32 billion in the same period in 2017 as inflows from land-based Filipino workers inched up 2.8 percent to $20.5 billion, while that of

sea-based workers grew 4.1 percent to $5.5 billion.

The BSP has lowered the growth targets for both personal and cash remittances to three percent instead of four percent for 2018 and 2019.

The US is a major source of remittances accounting for more than a third in the first 11 months of 2018. Remittances from US-based Filipinos climbed 5.7 percent to $9 billion from January to November last year compared to $8.51 billion in the same period in 2017.

Remittances usually fuel personal consumption, helping sustain a steady economic growth. The amount of money sent home by overseas Filipinos usually account for 10 percent of gross domestic product (GDP).

Strong inflows from remittances, earnings of the business process outsourcing (BPO) sector, as well as tourism receipts continued to boost the peso that recovered strongly late last year.