Economists at Bank of the Philippine Islands (BPI) believe that the plan of former President Rodrigo Duterte’s supporters, especially overseas Filipinos workers (OFWs), to protest his detention by the International Criminal Court (ICC) at The Hague through a “zero-remittance week” could do more harm than good for families benefitting from these cash transfers.
“Assuming they can actually do it, can they afford not to remit to their relatives? That will clearly widen the current account position—its negative position, and have some negative consequences on the [foreign] exchange, on the reserves accumulation plan of the government, and it may actually even affect interest rates,” BPI lead economist Emilio Neri Jr. explained during a briefing on Wednesday, March 26.
“Even [economic] growth can be dragged since [remittances are] a major funder of household final consumption,” Neri pointed out.
Remittances are the Philippines’ top source of US dollars, with cash from abroad coursed through banks hitting an annual record high of $34.49 billion in 2024, bolstering domestic consumer spending.
At the start of the year, cash remittances rose year-on-year but declined month-on-month to $2.92 billion in January. To recall, the month of December 2024 had achieved a historic high of $3.38 billion in remittances.
Neri noted that a zero-remittance week would affect not only the Philippine peso but also the Bangko Sentral ng Pilipinas’ (BSP) plan to further lower interest rates this year.
“The impact could [allow the peso to] breach the ₱60 level immediately, or the BSP might have to postpone any [rate] cuts at all this year, maybe even have to hike later if we hit ₱61 or ₱62,” he warned. The peso is currently trading at the ₱57 level.
But according to the BPI economist, the remittance strike would unlikely push through, noting that many Filipinos working overseas are based in the United States (US) and the Middle East, hence cannot fully represent the majority of the OFW population.
Furthermore, BPI strategist Marco Javier computed huge losses to be incurred if the week-long remittance halt happens.
“I did some very rough calculations… If we grow [remittances by] three percent to about $35.5 billion this year, it’s about $97.3 million a day that might be lost… It can be a bit substantial,” he elaborated.
Javier added that the prospects of going on a remittance strike may be difficult, stating that, “Those that have amortizations for their housing loan, their car loan, and, of course, also the tuition for their kids to stop might not be a bit hard” to convince to stop sending money back home.
These were the BPI economists’ warnings, as they anticipate that the BSP’s first interest rate cut for 2025, widely expected in April, would help stimulate the country’s economy despite ongoing domestic price spikes.
Neri stated that the BSP is now in a better position to reduce interest rates due to improved domestic conditions, including lower inflation and a stable peso.
According to Neri, the peso exchange rate is closer to ₱57, while inflation is nearing around two percent.
“The first one [rate cut] is expected to be on April 10, assuming that the April 2 announcement will not be such a game changer,” he told reporters, referring to the also much-awaited forthcoming announcement of US President Donald Trump’s tariffs policy at the beginning of next month.
Neri noted that the BSP paused from monetary policy easing in February “because there’s too much uncertainty back then; they decided to wait and see.”
On top of the looming April rate cut, “we think the next one will have to be before the fourth quarter of this year… The favorable base effects arising from rice will be washed out by the fourth quarter,” he added.
The BPI economist noted that the fading base effects from rice and rising meat prices, among other inflation items, may cause the central bank to hold off rate cuts in the fourth quarter, in case the price increase trends continue.