DOF to rebalance $500-M RP debt to stem peso rise

Finance Secretary Margarito Teves told the Senate yesterday that the government would rebalance $500 million of the country’s debts to help tame the peso’s strength against the dollar.

Teves made the disclosure during a Senate hearing to determine what the government could do to alleviate the plight of overseas Filipino workers and other sectors affected by the peso appreciation.

Sen. Manuel Roxas II, chairman of the Senate trade and commerce committee that conducted the hearing, welcomed the move of the Department of Finance.

“This is good initial step but it is not enough. This is a small amount compared to the billions of dollars coming into the country at this time,” he said.

Roxas earlier suggested that the government cease borrowing in dollars to finance or “roll-over” maturing debt, and instead, borrow in pesos locally to prop-up demand and effectively increase the greenback against the peso.

He also proposed the suspension of the 12-percent expanded value added tax on oil so that the people, particularly the OFWs would not have to pay more given the decreasing value of their dollars.

The OFWs ironically suffer from the strength of the peso caused by their remittances, which have also been propping the economy.

 Philippine Exporters Confederation president Sergio Ortiz Luis said exporters, particularly the small and medium-scale firms, could not cope with the 20 to 30 percent appreciation of the peso — and depreciation of their incomes — in a span of a year. He made a call to government for “burden sharing.”

Aside from the OFWs, business process outsourcing and the tourism industries are hurt by the strong peso.

Roxas pointed out that due to the depreciation of the peso by almost P10 since last year, incomes of families of OFWs depreciated by as much as 20 percent, or by P20,000 each if there were eight million OFWs remitting an aggregate of $16 billion per year.

Furthermore, incomes of the export, BPO and tourism sectors have contracted by the same rate, thereby compromising employment in these growth sectors.

In yesterday’s consultation, representatives of the OFW, export and transport sectors aired their plea for immediate and concrete government action.

In behalf of the Filipinos abroad, OFW Association president Pepito Quijano and former Philippine Association of Service Exporters president Lito Soriano said decreased earnings could lead to the reduction of investments by OFW families in properties and education.

They also proposed that remittance fees be reduced and that banks support OFWs through personal finance education, among others.

Philippine Association of Supermarkets, Inc. president Federico Ples noted that reduced OFW spending had also made a dent on their sales.