Finance Secretary Benjamin Diokno (Joseph Vidal/Senate PRIB)
The Philippine government will continue to rely more on domestic borrowings compared to foreign funds to meet its needs, but it is also considering to float US dollar-denominated retail bonds in December, according to Finance Secretary Benjamin Diokno.
Diokno said on Monday the possible issuance was targeted at overseas Filipino workers (OFWs) in particular, at a time of the year when a significant part of yearly inflows traditionally pours in.
“This could be very attractive to OFWs especially for those who, for example, have children going to school five years from now,” he added.
In the eight months ending in August, dollar inflows from OFWs that were sent through banks reached a total of $20.99 billion or 3 percent higher than $20.38 billion in the same period of 2021.
The Bangko Sentral ng Pilipinas (BSP) expects the growth in personal remittances to stabilize at 4 percent in 2022 and in 2023 following a 5.1-percent rise to a full-year record high of $34.88 billion in 2021 and an 0.8-percent contraction in 2020.
The continued growth in cash remittances, along with inflows from business process outsourcing and the export of goods, is expected to help shore up the Philippine peso, which has depreciated fast since June when it hit 53:$1.
Earlier this week, Diokno—who had been BSP Governor until June 30 when he became Finance Secretary—said the government may prevent the local currency from hitting 60:$1 by intervening in the foreign exchange market with $10 billion worth of gross international reserves aside from further raising the BSP’s benchmark rate by a total of one percentage point over two policy meetings in the next two months.
On Monday, Diokno clarified that market intervention was his personal opinion and does not represent a decision of the Monetary Board, of which he is one of seven members.
Still, he added that his comments about further policy rate hikes agreed with the recent statements the BSP Governor Felipe Medalla said recently during meetings in Washington DC. INQ