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Financially Illiterate and Unbanked Filipinos Hit Harder by the Coronavirus Pandemic

  • The effects of the coronavirus pandemic are compounded by Filipinos being poorly informed about financial literacy issues and have minimal to no access to banking services.
  • The governor noted that financial “unpreparedness” limits the ability of Filipino families to cope and recover from the pandemic’s socio-economic effects.
  • Filipinos’ failure to save for an emergency fund or excessive expenditures that result in over-indebtedness could compromise the health and happiness of families, even without a crisis.
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The adverse economic effect of the country’s coronavirus pandemic is compounded by the fact that most Filipinos remain poorly informed about financial literacy issues and have minimal to no access to banking services, moreover.

Thus said the central bank chief, as he called on stakeholders in the financial sector over the weekend to capitalize on the opportunities provided by the current public health crisis to broaden the scope of banking services throughout society.

“Financial distress is a reality for Filipino families living from paycheck to paycheck, those relying on low-income livelihoods and those dependent on remittances from relatives abroad,” central bank Governor Benjamin Diokno said. “Even families who were doing relatively well are increasingly becoming vulnerable as the pandemic continues.”

Particularly, the governor noted that financial “unpreparedness” limits the ability of Filipino families to cope and recover from the pandemic’s socio-economic effects, adding that failure to save for specific goals such as an emergency fund or excessive expenditures that result in over-indebtedness could compromise the health and happiness of families, even without a crisis.

The BSP chief also noted that only 23% of adults have bank accounts, leaving the most disadvantaged “unbanked” individuals with no outlets into which social support from the government can be channeled quickly. Also, electronic payments are only used by 4% of the country’s adult population. Nearly half of adults save, but 68% keep their savings at home.

According to Diokno, more than one-third of Filipino adults are unable to meet daily spending needs and turn to emergency loans, only 18% are covered by insurance, and only 3% invest in financial instruments.

“Aside from lack of budget, lack of awareness and perceived high costs are often cited by respondents as key reasons for not opening an account, not saving, not using e-payments and not getting insurance,” Diokno added.

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