Philippines: Lower inflation rate, huge gov’t savings give room for optimism — Bunye

Lower inflation rate and huge savings in the government�s debt payments as a result of the strong peso give room for optimism as Filipinos look ahead to 2008.

�The strength of the Philippine peso has served us well in acting as a buffer against the rising tide of oil prices in the world market,� Press Secretary and Presidential Spokesman Ignacio R. Bunye said in his weekly column, The View From the Palace.

He admitted though that on the minus side, families of overseas Filipino workers (OFWs) and exporters are hard hit by the strong peso. �A strong peso reduces the competitiveness of our export products as they become more expensive in dollar terms. The impact is somewhat less for exporters with high import contents. As the peso appreciates, beneficiaries of OFW remittances also receive less in pesos,� he said.

On the plus side, a stronger peso translates into huge savings estimated at P15 billion in 2006 �while savings up to the period ending Sept. 2007 reached P24 billion, due in large measure not only to the peso appreciation but also to increased creditor confidence as a result of our prudent deficit management,� Bunye said.

Backed by huge savings, the administration of President Gloria Macapagal-Arroyo has taken bold measures to increase the 2008 budget for education, health and infrastructure.

Despite the continuing increase in oil prices in the world market, Department of Energy estimates placed the average savings in 2007 from the appreciation of the peso from P51 to a dollar to its current level of P46.88-$1 as of end-Oct. 2007, at around P2 per liter for both unleaded gasoline and diesel.

Deeply conscious of both the minuses and pluses of the strong peso, the �Bangko Sentral ng Pilipinas has come up with measures to temper the peso appreciation and ensure overall stability in the foreign exchange market,� Bunye said.

The prepayment of some of the Philippines� foreign debt somehow slowed the strengthening of the peso while cutting down the country�s overseas obligations.

The Development Bank of the Philippines, meanwhile, partnered with trading and finance departments in conceptualizing a hedge fund for exporters. �For our OFWs, the BSP continues to promote competition in the remittances market while pushing for financial literacy programs for OFWs,� the Malacanang official said.

He assured that the Arroyo �administration will continue to pursue safety nets for the export and OFW sectors because these vital sectors have been producing tremendous gains for the economy.�

Moreover, �OFWs deserve quality support and assistance from the agencies of government considering their heroic sacrifices to help the nation and secure a brighter future for their families,� Bunye added.

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