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RECOGNIZING the “significant impact” of weak exports,
high oil prices and overseas workers’ remittances on the
country’s growth, Malacañang said on Tuesday that it
will look into the possible reduction of
dollar-remittance costs and the issuance of bonds to
generate funds for export loans, among other mitigating
measures.
Press
Secretary Ignacio Bunye said the proposed measures were
discussed at the National Economic and Development
Authority (Neda) and National Anti-Poverty Commission (Napc)
meeting in Malacañang where Acting Neda Director-General
Augusto Santos reported on the economic impact of high
oil prices, weak exports, and dollar remittances.
In his
presentation,
Santos
said that while the high food and oil prices would not
derail the government’s 2007 inflation target, such
factors are “likely” to have an inflationary impact next
year.
“Overall, declining exports will have a significant
impact on GDP growth,” Bunye said in a statement that
gave highlights of the Palace meeting.
Bunye
said that Santos used the 2000 input-output (IO) model
to simulate the impact of decelerating merchandise
export growth on total export growth, for a 3-percentage
point reduction in exports, or from 11 percent to 8
percent in 2007.
To help
the export sector, Bunye said it was proposed that “the
Department of Finance look into the possibility of
issuing bonds, the proceeds of which are to be lent out
to exporters.”
The DOF
will also “look into the issuance of peso-denominated
bonds for infrastructure.”
Bunye
said the Bangko Sentral ng Pilipinas (BSP) will be
invited to next week’s Cabinet meeting to report on
“possible assistance to reduce the cost of financial
transactions.”
Bunye
said that while Santos had given assurances the 4-5
percent inflation target for the year remains “within
expectations” despite rising food and fuel prices, the
acting Neda chief actually noted that such factors will
likely have an impact on inflation next year.
“The
impact of increasing food and fuel prices remain benign
given increases are within expectations, thus expected
inflation remains unchanged. The impact of inflation
will most likely be felt in 2008,” Bunye said.
In his
presentation,
Santos
said the percentage-point impact on inflation for an
over-1-percent increase in sugar prices is 0.017576;
flour, 0.004952; and retail fuel 0.0658.
To ease
rising flour prices, Bunye said it was proposed that the
DOF discuss with the BSP the possibility of opening “a
Letter of Credit to a flour supplier to increase his
share in the market from 8 percent to 12 percent.”
If, for
any reason, the supplier is not qualified to open an LC,
Bunye said “the PITC (Philippine International Trading
Corp.) shall be asked to provide the necessary
intervention or financing.”
The DOF
will also study the revenue-neutral tariff reduction on
flour, which the President had earlier ordered two
departments—of Trade and Industry and of Agriculture—to
look into.
In view
of rising sugar prices, the President ordered
Agriculture Secretary Arthur Yap and chairman Romulo
Neri of the Commission on Higher Education “to discuss
how the farmers and LGUs can plant sorghum, taking into
consideration the 2 million upland distribution and
development for agribusiness as well as the necessary
financing for qualified beneficiaries under the
program.”
Santos
reported that remittances of overseas Filipino workers
“remain on-track despite the recent slowdown and is
expected to pick up in the fourth quarter.”
Among
the proposed measures to help reduce remittance costs is
for the Development Bank of the
Philippines
and the Land Bank of the Philippines to “explore the
possibility of having partnerships with Smart
Communications and Globe Telecommunications, and
pawnshops to reduce the cost of remittances.” |
