News Release - March 22, 2005
References: Connie Bragas-Regalado, Chairperson, 259-1145 & 0927-2157392
Vince Borneo, Information Officer, 0927-7968198

Gov't plan to borrow against remittances will not do OFWs, families any good

Calling it an economic nightmare, the MIGRANTE Sectoral Party thumbed down the Macapagal-Arroyo government's plan of raising cheaper funds by borrowing against expected inflows from overseas Filipino workers (OFWs).

"Why is government going to capitalize on the diaspora of Filipino workers to secure more loans? Since remittance inflows cannot be accurately charted, getting onerous loans using our hard-earned remittances as collateral will further bury the Philippines in foreign debts. This is a complete mockery of all the sacrifices of overseas Filipinos," MIGRANTE Sectoral Party Chairperson Connie Bragas-Regalado said.

Finance Secretary Cesar Purisima is now boasting that "the Philippine government is to adopt the Mexican tack of raising cheaper funds by borrowing against expected inflows from OFWs."

"While the Philippine government boasts of being the world's third biggest recipient of migrant fund transfers, next to India and Mexico, it does not give appropriate services and allocations for the 10 million overseas Filipinos who all contributed to the all-time high of US$8.5 billion at the end of 2004. Now government wants to use our contributions that keep the stagnant economy afloat to get more loans and push our people deeper into debt," Bragas-Regalado said.

Purisima had said he was "looking at seven- to five-year structured financing through the securitization of OFW remittances, asserting that some European investment banks had already tried this asset securitization scheme, involving lending money to banks in Mexico based on the expected inflow of funds from remittances."

"This government plan is definitely a speculative venture. No government can accurately chart the remittance flows since overseas Filipinos largely use informal channels to send money home. This is due to the high fees charged by banks amounting to US$6 per remittance. What government wants is to get fast onerous loans using assumed remittance targets that is never accurate," Bragas-Regalado said.

These Latin American transactions allowed the banks to issue secured bonds before they actually had the money, based on the expected amount of remittances that would enter the system through wire transfers, and then reinvest the money they received.

"Government should abandon this plan from the very start. The loans that it wants to get will only further burden the people and will not benefit the very people's sacrifices and hardships they are using as collateral - the overseas Filipinos," Bragas-Regalado pressed.

MIGRANTE also said that the growing migration of Filipinos and its perceived benefits brought about by remittances does not lead to long-term productivity, increased wages and employment in the domestic economy."

"The Macapagal-Arroyo government cannot deny that the loss of Filipino workers to overseas employment takes a toll on the domestic economy that cannot be compensated for by remittances. Nor can it be assuaged by new onerous loans using these remittances as guarantee for payment and re-investment at the expense of our people," Bragas-Regalado said. #