PHL a net gainer from weak currency

Posted on July 03, 2017

A WEAKER PESO is not expected to significantly dent the government’s fiscal position as gains in import revenues outpace foreign debt servicing, leaving a net gain of P7.4 billion, the Finance department said.

Finance Secretary Carlos G. Dominguez III said the Philippines is a net gainer even as the peso depreciates. -- KRIZJOHN ROSALES_PHILIPPINE STAR
In a report on sensitivity indicators for 2018, the department said the government rakes in an additional P9.5-billion revenues per every P1 decline of the peso versus the dollar.

This is due to enlarged revenues made from Customs port districts, as imported goods are valued higher with a weaker peso.

“We gain from the Customs collections,” Finance Undersecretary Gil S. Beltran told reporters on Friday.

Last week, the peso traded above the P50-per-dollar level, even hitting multi-year lows.

However, despite the gains from Customs revenues, due to a weaker currency, the government will also record a P2.1-billion increase in liabilities on higher valued foreign debts for every P1 drop of the local currency versus the greenback.

Still, such a decline would leave the government with a net gain of P7.4 billion, higher than the previous P7.2-billion net gain per peso depreciation estimated by the Budget department last year.

Finance Secretary Carlos G. Dominguez III said the government’s foreign debts aren’t big enough to pull down the additional revenues.

“We’re a net gainer. Remember our debt service is not that heavy,” he said.

Bureau of the Treasury data showed the government’s external debt was at P2.21 trillion as of end-April, representing 34.69% of the total P6.37-trillion outstanding debt.

Mr. Dominguez added that on top of the net fiscal gain for the government, the private sector also benefits from a weaker peso, especially the business process outsourcing (BPO) industry -- who are paid in dollars -- and overseas Filipino workers (OFWs).

“Is it (a weaker peso) really bad for us? For the economy, is it really bad to have a currency that is slightly undervalued? Just think how much more pesos are coming from both BPO and the OFWs. That is more than P50 billion a year from both of them,” said Mr. Dominguez. He added that higher valued remittances will strengthen household consumption -- one of the main drivers of the country’s growth story. -- Elijah Joseph C. Tubayan