Neda chief bares tack vs strong peso

Published on Wednesday, 28 November 2012 22:23

Written by Max V. de Leon | Reporter

The government has acknowledged that the appreciating peso could hurt the economy if it is not accompanied with growth in productivity.

This, Socioeconomic Planning Secretary Arsenio M. Balisacan said, is why bottlenecks, such as the high cost of doing business, bureaucratic red tape, and poor infrastructure are being addressed by the Aquino administration.

Also, Balisacan said the government is taking efforts to get all its pipelined public-private partnership (PPP) projects off the ground as soon as possible as these activities would entail the use of more dollars, particularly in the importation of capital goods and equipment.

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“Exchange rate is a key variable in the performance of the economy,” Balisacan said, pointing out that the appreciation of the peso affects the lives of ordinary people and employment.

He noted that an appreciating peso reduces the purchasing power of overseas Filipino workers (OFWs) and their families, and makes Philippine exports less competitive in the world market.

Also, since a stronger peso leads to cheaper imports, manufacturers and producers that cater only to the domestic market are losing sales.

Aside from that, Balisacan said stronger peso encourages the inflow of hot money, whose investors just
run away easily.

This, he said, is why the government needs to assist the Bangko Sentral ng Pilipinas in managing the peso appreciation, even if it is determined by market forces.

“We understand the factors. Now, it is coming from our own success, from our ability to attract dollar inflows, from the remittances and the recovery of exports. They contribute to the appreciation [of the peso],” Balisacan said.

However, he said with the private sector being encouraged to invest further, plus the government getting stronger interest for participation in the PPP projects, the peso appreciation would be partly addressed.

He said although the schedules for the implementation of the eight PPP projects that were announced have been moved back, some of the major ones have moved already.

The National Economic and Development Authority (Neda) Board is also set to meet today to consider other PPP projects, including the Cavite-Laguna Expressway and the South Luzon Expressway-North Luzon Expressway connector road.

Balisacan refused to say what he thinks is the appropriate peso-dollar exchange level. “But every time it strengthens, it hurts.”

He said other countries like Thailand are offsetting the appreciation of their local currency by increasing productivity.

This, he said, is where removing the bottlenecks in doing business is important.

Also, he said the government needs to help producers improve their technological know-how, and also assist farmers and the fishery sector cultivate better variants.