ASEAN KEY DESTINATIONS
December 14, 2007
The Philippines is planning to reduce foreign borrowings in 2008 to stem the strength of the peso against the U.S. dollar, which has been burdening overseas Filipinos and the country's export industry, said the Department of Finance (DOF) on Thursday.
In a statement, the DOF said it will also increase prepayment of dollar-denominated loans, create attractive investment instruments for overseas Filipinos, and reduce remittance costs to ease the impact of the strong peso, local TV network GMA News reported.
"Responding to the concerns of the overseas Filipinos and exporters is a priority of the administration," Finance Secretary Margarito Teves said in the statement, adding that the department is working to help protect these key contributors to economic growth from the peso's rapid appreciation against the US dollar.
Teves said it is asking the Development and Budget Coordination Committee for permission to increase the target share of peso borrowings to total borrowings in 2008 to 70 percent from 64 percent.
The government will do this, Teves said, by issuing 20 billion pesos (483 million dollars) more peso-denominated government securities.
This will bring down the target share of foreign borrowings to 30 percent from 36 percent as the government cuts down on commercial foreign borrowings and official development assistance project loans.
Teves said the DOF is also discussing with foreign creditors the possibility of prepaying foreign loans with higher interest rates now that the peso is strengthening against the U.S. dollar.
The Finance Department, Teves said, is also planning to issue bonds for overseas Filipinos that will yield higher interest compared to regular bank accounts. The government may release these bonds early 2008.
"These measures can directly assist in slowing down the peso's appreciation against the U.S. dollar or provide overseas Filipinos with opportunities to increase interest income or reduce remittance costs," Teves said.