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GOVERNMENT is acting early this time and anticipating
problems that could impact negatively on economic
growth, such as the decline in exports and the rising
oil prices in the world market.
National
Economic and Development Authority (Neda) acting
Director General Augusto Santos said an emergency
Cabinet meeting has been called by the President to
discuss the possible measures government may undertake
to mitigate the ill effects of these threats.
Santos
said three threats—rising oil prices, decreasing value
of overseas Filipino workers (OFW) dollar remittances
that may crimp the spending of beneficiaries, and
reduced exports—may be attributed to the strength of the
peso.
Santos
said a stronger peso is good for the economy, however,
in terms of making imports cheaper, decreasing the
amount to be paid for debt service, and increasing
investor confidence.
The Neda
has already prepared economic simulations and
recommendations, but the documents were not yet
available to journalists as of press time.
He added
that some of these measures may include the reduction of
tariffs for oil imports, but the trigger price will
still be determined by the Cabinet after today’s
meeting.
Another,
he added, is the advance repayment of debts to increase
demand for the dollar.
Last
year the President implemented a gradual reduction of
tariff duties on oil imports to decrease fuel prices,
using a sliding formula where tariff duties are adjusted
according to the increase in oil prices.
Meanwhile, as OFW remittances increase, Santos said the
peso value of these remittances decline. Complaints by
worker families about the low peso value of money they
receive from abroad have already reached the government.
He said there is a P7 loss for every dollar traded at
P44 per as traded yesterday, compared to the dollar last
year that traded at about P51. “Their losses are already
significant.”
On the
other hand, the decline in exports, Santos said, was
largely due to the slowdown in the
United States
economy, which is the country’s biggest export market.
The
Semiconductor and Electronics Industries in the
Philippines Inc. (Seipi) has announced it would reduce
its export targets for the year and the government is
also open to lowering its 10-percent export target for
2007, but Santos did not say by how many percent. The
Seipi is forecasting a 6-percent to 8-percent export
growth for this year instead of 10 percent.
But the
government is still firm in meeting its 6.1-to
6.7-percent gross domestic product (GDP) target for the
whole year despite these threats, he said, adding he
believes the Development Budget Coordination Committee
should also meet to revisit these targets.
Earlier,
Santos said the increase in oil prices will not affect
the country’s GDP. While oil prices continue to be a
concern, the appreciation of the peso will temper its
effects on GDP and inflation, he added.
The
growth drivers for the third quarter, Santos said, will
continue to be anchored on private consumption by
beneficiaries of workers abroad and the call centers or
business process outsourcing companies, as well as cash
inflow from the stock market and foreign direct
investments.
He said
the Department of Energy is making simulations on the
prices of oil. Earlier, Neda National Planning and
Policy Staff director Dennis Arroyo said the assumptions
on oil prices used by the Neda to compute the
6.1-percent to 6.7-percent GDP projection for the year
is $61 to $64 a barrel. |
