09/19/2011
Just when the Bangko Sentral
ng Pilipinas (BSP) has finally found its bearings, certain quarters are
again dead set on pushing it off track. Misgivings aside, I have lately
begun to appreciate certain BSP top officials’ burgeoning initiative to
get the management of our currency and debt back along the lines of
national welfare and interest. The BSP just recently recommended to
Malacañang its preference for borrowing locally (instead of
internationally) to accelerate the prepayment of debts and to “help
temper the appreciation of the peso” vis-à-vis stimulating demand for
the dollar.
The country’s Gross International Reserves (GIR)
jumped 51 percent from $49.95 billion to $75.6 billion year-on-year,
with our foreign debt standing at around $60 billion. The Philippines is
thus awash with dollars as well as in loanable funds in the Special
Deposit Account (SDA) maintained by the BSP, all waiting to be mobilized
in lieu of more foreign borrowings in the rolling over of debts or in
the funding of PeNoy’s public-private partnership (PPP) projects in
infrastructure and others.
The BSP is picking up the wisdom of the
way in which many in the private sector are handling their own dollar
debts. While the PeNoy government’s prepayment of foreign loans slipped
in the first half of the year, with prepayments of medium and long-term
foreign loans summed up to $530.9 million or 3.19 percent lower than the
$548.4 million recorded in the same period last year, newspapers report
that “All prepayments were made by the private sector.”
We have
been reading of different major private corporations prepaying foreign
loans. And for anyone seeking to avoid the burden and volatility of
interest payments amid the currency crisis, this is the only way to go.
Unfortunately,
Cesar Purisima (PeNoy’s Finance secretary and also Gloria Arroyo’s),
gave the already scheduled prepayment of debts his “thumbs down.” How
are we then to perceive such stonewalling of the proposal that many
concerned sectors of our economy, led by the BSP, push for?
OFWs,
being the largest contributors to the survival and viability of the
Philippine economy, have remitted up to $21 billion annually as of last
count. Yet the dollars they send to their families, coursed through the
BSP, are yielding fewer and fewer pesos; this, as the US currency is
being propped up by Purisima’s policy of accumulating more dollars in
our vaults.
The export sector, which has just lost another 10
percent in value in the latest reported data, has also been howling in
pain over the massive weakening of exports due to the strengthening
peso. The BPOs, including call centers and other service providers, have
also lost half of their income due to the peso’s appreciation.
Purisima,
in his defense, remarked, “Of course we are amenable to debt
prepayments but it is a question of opportunity because bulk of our
debts is publicly traded already and if their prices are very high it
will not make sense for us to prepay… All of these are long-term and
very low cost, so it does not make sense at this point to prepay also.”
In
response, this was what our Wednesday radio co-host Liza Gaspar, a
young UP finance graduate, had to say: “Purisima seems to be looking at
the issue only in financial terms; he seems to forget the more positive
and concrete impact of cutting the debt (is) in terms of savings on
interest payments and principal that could be redirected toward
productive enterprises.”
Gaspar clearly makes more sense than the
one-time SGV and Hyatt 10 head. Still, we shouldn’t fault Purisima too
much as he recognizes only the foreign financial interests as his
bosses.
If PeNoy has any idea on the matter at all, which isn’t
likely, the conflict from within his financial team seems to be erupting
right under his nose. Well, it’s not like he has taken any interest in
it at all, which is tragic, as the matter of finance has become the
central component in the governance of nations.
Former President
Joseph Estrada, who admits to being a novice on international finance,
says he resolved such issues during his time by getting members of his
financial team face each other off in serious debate while he listened.
Then, if a consensus is not achieved, a vote is soon called. But for
PeNoy, it seems that, like many other things under his governance, he
has allowed Purisima to simply call the shots, even as the Finance
secretary already seems to be sabotaging the Philippine peso in the
course of propping up the US dollar.
Of course, there is another
dimension to the financial and currency issue that is beyond the scope
of this column — the restoration of “currency and capital controls” as
well as the “nationalization” of the entire banking sector, which the
country had in the time of President Carlos Garcia. It is the final
solution to the perennial problem of peso volatility that perpetually
rocks the economy. That will be the next stage of the debate.
(Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6
p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 to 9 p.m., with
replay at 11 p.m., on GNN, Destiny Cable Channel 8 on “WTC’s Building 7:
The Key to Exposing the ‘Inside Job’”; visit
http://newkatipunero.blogspot.com for our articles plus TV and radio
archives)
(Reprinted with permission from Mr. Herman Tiu-Laurel)
Source: The Daily Tribune
URL:
http://www.tribuneonline.org/commentary/20110919com5.html
