Latest Stories

Philippines sees big interest savings on foreign loans due to strong peso


The Philippine government expects to have generated savings from interest payments this year mainly due to the strengthening of the peso against the US dollar. AFP PHOTO

MANILA, Philippines—The government expects to have generated savings from interest payments this year mainly due to the strengthening of the peso against the US dollar.

Budget Secretary Florencio Abad said interest payments by the government for the year was originally estimated at 18.3 percent of the P1-trillion budget, but the actual figure would likely be lower partly because of the positive impact of the peso appreciation.

As the peso rises, the peso value of dollar-denominated debts drops. This brings down spending for debt payments.

The peso has appreciated by more than 6 percent since the start of the year. It is now at 41-to-a-dollar level compared to 43 to a dollar at the start of the year.

A stronger peso also helps trim the cost of imported goods, thereby tempering domestic inflation.

The peso strengthening, however, also has its disadvantages. Exporters have been complaining that the peso appreciation makes Philippine-made goods more expensive in dollar terms and, thus, less competitive in the global market.

Some exporters blame the rise of the peso for the country’s anemic export earnings this year.

In the meantime, Abad said the peso appreciation was one of the factors that helped the government reduce spending on interest payments. He said debt management strategies that the administration had adopted also helped in bringing down interest payments.

These strategies included debt swaps and bond buyback programs. A debt swap program allows holders of government securities to exchange their maturing bonds with freshly issued paper.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: currencies , foreign loans , Government Debt , interest payments , interest savings , Peso , Philippines

  • Ozamis7

    Stronger Peso is not a good news for us OFW. The exchange rate of Peso become stronger but the price of our basic accommodities in the Philippines never go down, so what’s the push…

  • Hayek_sa_Maynila

    This benefit is fleeting. If something goes wrong with the economies of Europe or the US again, the peso value of our foreign debt can balloon immediately. The peso’s nearly 7.0% appreciation against the US dollar cannot be justified. Why are Singapore and Korea resisting appreciation even if they have stronger economies and income per capita is 15 to 20 times bigger than the average Filipino. When will we ever learn to use the currency to our advantage?

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Aquino: ‘Doubting Thomases’ now contributing to PH recovery
  • Fire engulfs apartments in Sampaloc
  • Messy warehouse belongs to Unicef, WFP, says Soliman
  • Suspected Abu Sayyaf rebels release hostage
  • New meaning of Easter in Samar
  • Sports

  • Warriors beat Clippers in playoff opener
  • Pacquiao top Mayweather contender
  • Rain or Shine, Ginebra clash for No. 6 spot
  • Ateneo eyes quarterfinal spot vs Benilde
  • Style contrast marks OneFC ‘Rise of Heroes’
  • Lifestyle

  • Noli Yamsuan, Cardinal Sin’s ‘official’ photographer: ‘I could smell the aftershave lotion of the Pope’
  • Simplifying and lightening life
  • Where to go for Easter night-out
  • Joe de Venecia visits the Queen Mother of Cambodia
  • Fashionistas flock to designer’s wedding
  • Entertainment

  • Show-biz celebrities’ other choices of summer getaway
  • Why ‘Noah’ can’t dock his ark at Philippine theaters
  • Acclaimed artist goes wild while on holiday
  • Believing in this mermaid
  • Missing Xian
  • Business

  • Top-selling insurance agent opens her dream café
  • Connecting and transacting with one another
  • Building wealth for health
  • Why Mandaue Foam buys, rather than rents, space
  • A workplace of new possibilities
  • Technology

  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Opinion

  • Epiphany
  • Unpaid creditor vs distressed debtor
  • Moving on
  • From culinary desert to paradise
  • Response to China: ‘Usjaphil’
  • Global Nation

  • Asia seeks Obama’s assurance in territorial spats
  • Cesar Chavez movie sparks memories of Fil-Am labor leaders
  • Filipinos in US poised for success
  • Visas for priests and other faith leaders
  • DOH to continue tracking co-passengers of OFW infected with MERS virus
  • Marketplace