Finance Secretary Cesar Purisima on Tuesday said the Department of Finance was studying together with the Bangko Sentral ng Pilipinas the proposal for the government to either go slow on securing foreign debt or exclusively tap the local market for its commercial borrowing needs this year.
“If we need not borrow internationally to support the BSP then we will do it,” Purisima told reporters on the sidelines of an investment forum organized by Euromoney.
The BSP had suggested that the government reduce its foreign borrowings to help temper the continued appreciation of the peso.
The peso last year was one of the fastest appreciating Asian currencies on the back of enormous inflow of remittances, foreign portfolio investments, and foreign investments in the business process outsourcing (BPO) sector.
Although an appreciating peso has benefits, it has also elicited complaints from the export sector.
It said the strong peso was making Philippine goods more expensive to foreigners and, therefore, less competitive.
The BSP, however, said it had been acting on concerns on the peso. In particular, the BSP has been mopping up some of the excess dollar liquidity. The dollar purchases, in fact, have bloated its expenses.
The latest income statement of the BSP showed that in the first 11 months of 2012, the BSP incurred a net loss of about P86 billion due to expenses related to its foreign exchange operations.
The mopping up operations of the BSP likewise resulted in the buildup of the country’s foreign exchange reserves, which now stand at about $84 billion.