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MALACAÑANG
Palace
agreed to adopt Sen. Mar Roxas II’s recommendation to
limit dollar loans to amortize maturing foreign debt,
borrow in pesos locally and buy dollars from the local
currency market in order to moderate the negative
effects of the rapid rise of the peso.
Roxas himself reported this to the media
after attending the Legislative-Executive Development
Advisory Council (Ledac).
Meanwhile, responding to the lament of
overseas workers’ families they are now losing about
P308 for every remitted $100, the Development Bank of
the Philippines (DBP) has agreed in principle to create
a special facility for them that would set a fixed
exchange rate for their remittances over a specified
period.
Marianito Roque, administrator of the
Overseas Workers’ Welfare Administration (Owwa),
announced the development in “The Cabinet Speaks,” a
televised forum on current issues, on Tuesday.
He said after the forum that the DBP, so
far, is the only bank that has agreed to offer the
special facility, and that talks with other banks are
ongoing.
Roque said the proposed forward cover is
similar to the special hedging facility being offered by
the DBP to exporters affected by the strong peso.
He said the idea is for the workers to
bring their contracts to a participating bank to show
their salary in US dollars, then enter into an
arrangement with the bank to remit to them for a year at
the agreed fixed exchange rate that is guaranteed by the
bank.
“This way, there is a guarantee that if
the exchange rate goes down [the peso further
strengthens], the OFW is protected,” said Roque.
The Owwa is also helping OFW families
set up small-business “backyard operations” to help make
up for their shrinking purchasing power.
DBP Chairman Patricia Sto. Tomas had
earlier proposed the plan, amid calls by workers for
government to intervene in the market to keep the peso
value of their dollar remittances from further
shrinking.
OFW groups earlier asked for a fixed P50
to $1 exchange rate, which the Bangko Sentral ng
Pilipinas rejected.
Meanwhile, Roxas reported that President
Arroyo herself directed Finance Secretary Margarito
Teves to study his proposal to limit dollar borrowings,
borrow in pesos and consider its immediate
implementation.
“We sought urgent action from the
executive branch to increase domestic demand for the
greenbuck and, in effect, buffering the peso’s steep
climb which has been hurting our OFWs, exporters, BPOs
and tourism industry,” Roxas said, adding he was
thankful that President Arroyo “heard us out.”
In an interview, the senator noted that
under the proposed General Appropriations Act for 2008,
the government has programmed to borrow P125.43 billion
from foreign sources, P87.67 billion of which would be
used to roll over foreign debt. He added that as per the
latest data from the Bureau of Treasury, the
government’s outstanding foreign debt now stands at P1.7
trillion, or $41 billion using the present exchange
rate.
“We have a situation where we are
flooded with dollars, yet the government still plans to
borrow dollars to roll over our maturing debt. We are
just shooting ourselves in the foot by doing this,”
Roxas, trade and commerce committee chairman, said.
He warned the other day that the economy
is “in danger of stalling” with OFWs and exporters
crying out for months about the peso’s continued rise,
resulting in the reduction of their incomes by as much
as 20 percent. M. Gonzalez, B. Fernandez |
