MANILA, Philippines – Economists believe that a planned “zero remittance week” among overseas Filipino workers (OFWs) will hit their families back home the hardest.

Their remarks come after some OFWs urged their fellow Filipinos abroad to hold a “zero remittance week” from Friday, March 28 to April 4 to protest the arrest of former president Rodrigo Duterte as he faces International Criminal Court (ICC) charges for his bloody drug war.

Bank of the Philippine Islands (BPI) lead economist Jun Neri said in an online briefing on Wednesday, March 26, that the remittance ban proposed for March 28 to April 4 could impact the country’s economic growth due to its effects on household spending.

In particular, Neri believes this will widen the Philippines’ negative current accounts position, government reserves and interest rates.

“We could breach the 60 level (Philippine peso vs US dollar exchange rate) immediately, or [Bangko Sentral ng Pilipinas] might have to postpone any cuts at all this year, maybe even have to hike later on this year if we hit the 61, 62 level,” he explained.

A country’s current account covers trade in goods, services, primary income, and secondary income. Remittances from Filipinos overseas are considered secondary income, while the compensation of short-term OFWs count toward the country’s primary income.

Bangko Sentral ng Pilipinas (BSP) data from 2024 showed that the current account deficit grew 41.4% to $17.5 billion amid increased imports of rice, iron and steel, as well as office and electronic data processing machines.

However, OFW families back home will be the most affected by the ban since they may have to cut corners in their daily expenses if interest rates and foreign exchange rates rise.

“Trying to convince people, especially those that have amortizations for their housing loans, their car loan, and of course also the tuition for their kids to stop, might be hard to convince [them],” said BPI strategist Marco Javier.

Javier also questioned whether those calling for a zero remittance week represent the sentiments of all Filipinos abroad.

For IBON Foundation’s executive director Sonny Africa, the proposed remittance ban is all “bluster and optics.”

“Unsent remittances will eventually be sent, and a hundred billion dollars in international reserves can easily smoothen this in a few days,” Africa said.

While Filipinos abroad sent a record $38.4 billion back home in 2024, BSP data show that the Philippines has $107 billion in gross international reserves (GIR) as of February. This can cover 7.4 months’ worth of imports, payments of services and primary income.

If the remittance ban is sustained for multiple weeks or months, Javier said the government may need to borrow more dollars.

The Philippines’ sovereign debt stood at P16.31 trillion as of end-January as the government increased its domestic and external borrowings. External debt grew 2.1% during this period to P5.23 trillion amid increased borrowings and “unfavorable” US dollar and third-currency movements.

BPI economists also forecast the peso may fall to P60 against the greenback in 2024 amid the volatility of US President Donald Trump’s economic policies. – Rappler.com