Bangko Sentral ng Pilipinas deputy governor Nestor Espenilla said yesterday that Land Bank of the Philippines has been allowed to sell P5 billion worth of 10-year certificates of deposit to overseas Filipino workers.

The peso-denominated deposits would be offered in denominations of P20,000 and will fetch as high as 6.25 percent for five and a half years and 6.88 percent for 10 years.

has authorised state-owned Land Bank of the Philippines to offer up to 5 billion.

Overseas Filipinos sent home $14.45 billion last year and the number is forecast to rise to $15.7 billion in 2008. But much of the money has been spent on personal consumption.

The new deposit scheme to be presented in a roadshow in Hong Kong on March 30 will encourage overseas workers to save and to give them a hedge against further declines in the dollar.

The government also hopes that the scheme will attract funds that are otherwise sent home with the help of relatives and friends rather than through official channels.

The deposits will be covered by the Philippine Deposit Insurance Corp. up to P250,000 per depositor and would be exempt from withholding tax if held to maturity.

The final interest rates, however, will depend on the prevailing market rates at the time of issuance.

E OFWs might invest either in the zero-coupon or annuity-type investment products, which may be exempted from taxes.

In the zero-coupon instrument, investors get the interest and principal in full only on the 10th year. In the annuity type, the investors get the interest earnings on regular tranches only on the next five years, then the principal on the 10th year.