GOVT TAKES STEPS TO HELP OFWs, EXPORTERS COPE WITH RISING PESO
MANILA, DECEMBER 14, 2007 (STAR) By Iris C. Gonzales - The Department of Finance (DOF) will implement several key measures to help overseas Filipino workers (OFWs) and exporters cope with the continued appreciation of the peso against the dollar.
Exporters and OFWs have been complaining of the steady rise of the peso against the greenback as this diminishes the value of their dollar earnings. The peso has been constantly appreciating against the dollar on the back of hefty inflows from OFWs. On Wednesday, it closed at 41.31, its highest level since May 10, 2000 when the peso closed at 41.27 against the greenback.
The local currency has already appreciated by 18 percent since the start of the year, making it the best performing currency in Asia.
As of end-November, the peso averaged at 42.798 against the dollar. As of end-2006, the peso averaged at 46.549 to $1.
Finance Secretary Margarito Teves said the DOF would intensify efforts to prepay foreign loans, reduce the programmed foreign borrowings, create attractive investment instruments and reduce remittance costs.
“Responding to the concerns of the OFWs and exporters is a priority of the administration. In cooperation with government-owned and controlled corporations and government financial institutions, the DOF is working to help protect these key contributors to economic growth from the peso’s rapid appreciation against the dollar,” Teves said.
The government’s original borrowing program for 2008 is P346.1 billion. Of the amount, gross external borrowings will amount to P125.4 billion while gross domestic borrowings will amount to P220.7 billion.
As such, the DOF is increasing the target share of peso borrowings to total borrowings in 2008. Under the plan, fiscal authorities will increase to 70 percent from 64 percent the share of local borrowings.
This would be done by issuing more peso-denominated government securities in the domestic market by roughly P20 billion, Teves said.
The DOF will also reduce the target share of foreign borrowings to 30 percent from 36 percent by cutting its commercial foreign borrowings and official development assistance project loans.
“The DOF is now seeking approval from the Development Budget Coordination Committee,” Teves said.
Teves said the government is also discussing with foreign creditors the possibility of further prepaying foreign obligations that carry high interest rates.
Furthermore, the government is set to issue bonds by early 2008 that will provide OFWs with higher interest income compared to what they may be earning in regular deposit accounts.
The DOF will also reduce remittance fees of government financial institutions (GFIs) including the Land Bank of the Philippines (Landbank).
Landbank, for instance, has reduced remittance charges in its San Francisco, California branch by as much as $4, thus bringing the charges on dollar-to-peso remittances to a range of $6 to $9 from $7 to $13 before.
“We are encouraging other banks engaged in the remittance business to also reduce their charges to help our OFWs,” he said.
Chief News Editor: Sol Jose Vanzi
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