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President Gloria Macapagal-Arroyo has ordered the Department of Finance to study a proposal of Senator Mar Roxas for the government to shift from dollar loans to peso loans as a means to curb the peso’s climb and ease the adverse effect on overseas Filipino workers (OFWs) and other sectors, Roxas said Wednesday.

He said the President gave the order at a meeting of the Legislative-Executive Development Advisory Council on Tuesday in Malacañang, in which economic officials and lawmakers discussed ways to mitigate the impact of a strong peso on OFWs, exporters and the tourism and call center industries.

Roxas has filed a resolution seeking a Senate inquiry into the rise in commodity prices during the peak holiday season amid the peso’s strengthening.

He said a shift to peso borrowing could be done directly in the 2008 budget, in which the government is programmed to borrow P125.43 billion from abroad, including P87.67 billion to be used to roll over maturing debt.

“We have a situation where we are flooded with dollars, yet the government still plans to borrow dollars to roll over our maturing debt,” said Roxas, who suggested that the government take advantage of the peso’s strength by retiring more of its dollar debts.

“Our OFWs are losing P10 for every dollar they remit” at the peso’s present exchange rate as compared with the rate last year, Roxas said.

“At $16 billion in annual remittances, OFWs are losing P160 billion worth of purchasing power in the economy,” he said. “Aside from that, the cost goods and services have not come down with a strong peso, and this has been a cause of imbalance.”

Roxas noted that a strong peso makes exports and tourism services more expensive, and call center jobs costlier.

He also noted that the central bank had incurred P60 billion in foreign exchange losses to keep the peso from rising further against the dollar.

“There is no central bank in the world that is capable of blocking a market trend,” he said. “There is no way that they can impose a peso-dollar exchange rate or to fix it, they will go bankrupt.” Edited by INQUIRER.net

• Gov’t debt down at P3.83 trillion
• 4-yr T-bond rate falls to 5.875%
• Gov’t to pay up to $1B of Napocor debts

• China wants new global monetary system
• Solons caution gov’t on privatization