MANILA, 4 September 2007 — Philippine Vice-President Noli de Castro has agreed to endorse a letter from overseas Filipino workers to President Arroyo that seeks to establish a preferential foreign exchange rate for legitimate OFWs that is above the 10-percent prevailing market value.
Based on the proposal, OFWs want a fixed P50:$1 rate for migrant workers instead of the varying daily market price. The peso ended at 46.57 to the dollar yesterday.
Primary signatories to the letter were Ronnie Abeto, an OFW based in Riyadh and former overseas financial analyst Miguel Bolos. The two said the petition was also signed by 15,000 OFWs worldwide.
The petition was circulated in the Internet for maximum exposure.
Abeto, the senior action officer of V-Team — Advocacy and Community Service, said the group is proposing that the Philippine government put up a stabilization fund to address the peso-dollar exchange rate fluctuation.
It added that the government should also enter into a collective “Forward Contract or Currency Options” with financial institutions to peg the peso-dollar exchange rate at 50:1.
De Castro said he would endorse the letter to the president and would monitor the progress of the request.
He also said he would look into the possibility of the group’s proposal for a government agreement with financial institutions. The viability of the proposal depends on the volume of the transactions and the ability of OFWs to organize themselves, he said.
He said that as early as last year, he has been pushing for plans to alleviate the plight of OFWs by urging the Bangko Sentral ng Pilipinas to study his proposal to lower bank charges on OFW remittances.
BSP Junks Proposal
Executive Secretary Eduardo Ermita earlier said the administration was studying the proposal to have a fixed exchange rate for OFWs.
Ermita said the matter was being addressed by the Department of Finance and the central bank.
The president’s chief aide said Arroyo and senior economic officials planned to meet with local and foreign businessmen to discuss the impact 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.
Ermita’s remarks has helped assuage OFWs’ concern over negative comments by economic and finance officials opposed to the proposal, among them Bangko Sentral Gov. Amando Tetangco Jr. who thumbed down the proposal as “costly and impossible to implement.”
“That proposal is fraught with difficult questions and issues,” he said, explaining 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:$1, 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 annually, assuming a market rate of P45.7 to the dollar and the fixed rate of P50:$1.
The amount would be over 85 percent of the total national government budget deficit for 2007 alone.
Tetangco also 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.
