The country’s economic managers have downplayed the negative impact of the peso at the P49:$1 level, saying the local currency could boost government revenue and support the dollar-generating sectors.
On Monday, the peso slipped to its lowest level in nearly eight years at P49.20 to $1 after a Fed official implied that the Federal Reserve is raising interest rates next month.
Budget and Management Secretary Benjamin Diokno said the government could generate about P7.2 billion each time the exchange rate drops P1 in favor of the dollar.
“Depreciation is not necessarily bad for us. In fact, for every peso depreciation, revenues will increase by P9.2 billion of higher collections by the Bureau of Customs because of the higher peso of imports,” he told reporters on the sidelines of the Senate interpellation of the 2017 national budget on Tuesday.
On the expenditure side, a weaker peso could cost the government P2 billion in foreign debt service, Diokno said.
“On the net, for very peso depreciation, the impact on the budget would be a P7.2-billion reduction in the budget deficit. So we are not concerned about that [peso weakness],” he said.
“I think it is sort of balanced there. We can’t say it is 100-percent bad for us because it is good for OFWs [overseas Filipino workers], BPOs [business process outsourcing]and the exports sector,” Finance Secretary Carlos Dominguez 3rd said.
Socioeconomic Planning Secretary Ernesto Pernia said the economy can sustain a P50 to P51 exchange rate per dollar.
“It will be good for exports and also OFW families who are getting remittances, and the BPOs,” he said.
“The downside would be imports will be expensive, but there will always be pros and cons. I think the pros are weightier than the cons,” he added.
The peso slightly recovered against the greenback on Tuesday, gaining 3 centavos to close at P49.17 to $1 from P49.20 on Monday.