MANILA, 16 August 2006 — An opposition senator has pressed for a Senate inquiry on what the government proposes to do to alleviate the plight of Overseas Filipinos Workers affected by the strengthening of the peso.

Senate Minority Leader Aquilino Pimentel Jr. said the circumstances behind the continuing appreciation of the peso against the US dollars and its impact on the lives of families of OFWs should be investigated.

Presidential Executive Secretary Eduardo Ermita said the administration was studying the proposal to have a fixed exchange rate for overseas workers.

“This matter is being addressed by the economic team, especially the Department of Finance and the central bank,” he said.

Ermita said Arroyo and senior economic officials also plan to meet with local and foreign businessmen to discuss the impacts of the strong peso and other pressing concerns. “We would be explaining to them the implications of the strong peso and what the government is doing to cushion its effects especially to exporters and importers,” he said.

OFW groups are pushing for a fixed rate of 50 pesos to the dollar, saying that the steep rise of the peso has resulted in a 20 percent reduction of their earnings.

Ermita’s remarks has helped assuage OFWs concerned by the knee-jerk reactions of President Gloria Macapagal Arroyo’s economic and finance officials opposed to the proposal., notably central bank governor Amando Tetangco Jr.

Tetangco thumbed down the proposal as “costly and impossible to implement.”

“That proposal is fraught with difficult questions and issues,” he said, explaning that such a program would require huge amounts of public funds because the difference between the market-determined foreign exchange rate and the fixed exchange rate would have to be subsidized.

“Who would bear the cost of that subsidy?” Tetangco asked, adding that if the current exchange rate of P45.7 to the dollar is offered to OFWs at, say P50 to a dollar, the difference of P4 would have to be paid by someone. With OFW remittances expected to reach at least $14 billion this year, such a program would cost over P60 billion a year, assuming a market rate of P45.7 to the dollar and the fixed rate of P50 to the dollar.

The amount would be over 85 percent of the total national government budget deficit for 2007 alone.

Secondly, Tetangco said access to such a program would be administratively impossible to implement.

“Who will be given this benefit? Just OFWs?” he said. “If you offer such a facility to one sector, why not open it to all the other sectors that also contribute to the economy and are just as affected by the appreciation of the peso.”

The BSP has been on the spot since the peso started to appreciate as a result of strong dollar inflows combined with the effects of an inherently weakening US dollar.

Skirting the Issue

President Gloria Macapagal Arroyo has been promising relief to overseas Filipino workers who have been hard hit by the appreciation of the peso. The recovery of the government’s fiscal position had opened the floodgates for investments that have been waiting in the sidelines in search of better profit opportunities.

Tetangco, however, skirted the issue of the P1 billion already being set aside by the Development Bank of the Philippines, on the advise of Arroyo’s economic managers, to ease the foreign exchange woes of exporters.

Even Labor Secretary Arturo Brion, whose department’s duty is to help ensure the welfare and protection of OFWs, outrightly ruled out the fixed rate proposal.

This has led some OFWs to question where the sympathies of these officials lie.

Other Ways

Trade Secretary Peter Favila, on the other hand, said there are other ways to help expatriates and exporters adversely affected by the stronger peso.

“It is the stated policy that we leave the behavior of the exchange rate to the market,” Favila told reporters.

“But we’re still looking at other ways to help not just the OFWs but even the small exporters.”

At the Senate, Pimentel said it was only right for the government to institute measures to mitigate the negative effects of the strengthening peso on the OFWs and their families. “The continuous strengthening of the peso against the US dollar is benefiting our national economy by improving our country’s balance of payments and allowing the government to service the country’s debts at a lower cost, among others,” Pimentel said in filing Senate Resolution 62 requesting for a legislative inquiry into the matter.

Pimentel explained that the OFWs in general are grumbling that while their salaries remain the same, the value of their dollar remittances to the families back home has drastically declined.

Meanwhile, campaigners for an online petition pushing for preferential exchange rate for OFWs called on others who have yet to sign to do so now before the proposal is forwarded to Malacañang Palace on Aug. 21.

“Add your voices now so that they will listen to us,” said Vic Barrazona of the Riyadh-based V-Team, which initiated the online petition that can be found in http://petition.patnubay.com.

Community leaders are also being encouraged to download copies of the petition to be signed by members who have no access to the Internet.

Defeatist Attitude

Proponents of a fixed rate asked fellow OFWs to ignore the naysayers who think the proposal will not even touch first base. “If we all think in a ‘defeatist’ manner, we really won’t get nowhere,” said Ronnie Abeto, one of the lead campaigners of V-Team.

He said the same negative attitude were exhibited when OFWs campaigned for a tax exemption and absentee voting to be allowed for overseas Filipinos.

The law making OFWs tax-exempt for income earned abroad too effect in 1998. The absentee voting law took effect in 2003.

“Let’s not forget that we are not asking for a preferential rate for the sake of asking. We ask because we adversely affected,” said another V-Team campaigner.