‘Political noise may dampen peso rise’

While the peso continues to gain strength, Malacañang and administration lawmakers warned yesterday that "political noise" generated by the opposition and failure to improve tax collections might still thwart the peso’s appreciation, which could reach the P47.50 to $1 level.

Presidential Chief of Staff Michael Defensor and Press Secretary Ignacio Bunye said political noise, especially coup and destabilization plot rumors, will affect the improved performance of the economy.

"We appreciate the solid outlook on our fiscal reform measures and the spirit of the nation is buoyed by positive forecasts on our economy," Bunye said, adding that the country’s economic gains should not be derailed. "What is important now is that we keep up the tempo and not lag behind due to the resurgence of political turmoil."

Hong Kong Shanghai Bank treasurer and head of global markets Arnulfo Veloso earlier said the resurgent peso could appreciate to a possible low of P47.50 to $1 by the fourth quarter of the year if the government meets its revenue target and if the country’s political situation remains stable.

"We have to consider that the political situation is still a drag on our development. The political heat is not yet at full steam, especially with persistent threats to oust President Arroyo," Tarlac Rep. Jesli Lapus said.

Lapus added that opposition leaders should also do their share in improving the Philippine economy by "rising above (their) ambition and work to defuse the political tension."

Another key factor on which the improved strength of the peso hinges is the ability of the Arroyo administration to implement the 12-percent expanded value-added-tax (EVAT) rate that is expected to generate some P80 billion in additional revenue for the cash-strapped government, Lapus and Isabela Rep. Rodito Albano said.

"We have to show that we will not only hit our revenue targets but (that the government will) also use the new revenue to deliver our promise of better and more services to the people," Lapus said. "Fiscal reforms and collecting more revenue must be complemented by judicious use of funds." — Delon Porcalla and Aurea Calica