Government takes steps to help OFWs, exporters cope with rising peso

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.