Propping peso needs concrete plan — Diokno

Economic trackers are urging the government to take definite action instead of applying a soothing balm to the peso, which is currently in free fall.

The government cannot simply tell Filipinos not to panic without presenting a concrete plan to rein in rising prices and arrest the peso’s depreciation, Akbayan Partylist Rep. Chel Diokno said.

In a statement Friday, Diokno urged President Ferdinand Marcos Jr.’s administration to spell out measures to address the worsening economic crisis, which has eroded the purchasing power of Filipinos.

While acknowledging the need to reassure the public, Diokno stressed that government assurances must be backed by concrete and effective action to help families meet their daily needs.

“Filipino families are already stretching their incomes to cover basic needs. The government must lay out clear, concrete measures to address these economic pressures and ease the burden on ordinary households,” Diokno said.

“Every time the peso weakens and prices rise, families can afford less with what they earn. The government must act to protect their purchasing power and ensure that necessities remain within reach,” he added.

Diokno’s statement was in direct response to the President’s recent “don’t panic” remark when asked about the historic decline in the peso’s value.

“First of all, do not take it with alarm. Don’t panic. It is still an effect of the rising prices of oil and fuel and its impact on the economy,” Marcos had said.

He said policies were in place to cushion the peso from further depreciation, while noting that the foreign exchange reserves remained “healthy.”

“We will continue to do all that we can to make sure that the value of the peso does not continue to go down, especially relative to the dollar,” the President said.

The currency dropped to a record low of P64.17 per dollar last Tuesday, 27 October.

Poor economic plan

In a separate statement, ACT Teachers Partylist Rep. Antonio Tinio said the peso’s weakening could be attributed to the Marcos administration’s failure to provide a solid economic blueprint.

Tinio said the lack of action on this concern further risks foreign investors’ interest in the country and increases the burden on ordinary Filipinos due to the high daily expenses.

“Don’t panic? The administration is posturing itself as being in control of the situation despite analysts predicting that the depreciation of the peso could continue into 2027,” Tinio said.

“The root cause of the stagnating economy is the lack of industrialization and a developed agriculture. In short, it is because of the failure of the administration’s overall economic plan,” he added.

OFWs’ main source of support

Sonny Africa, executive director of the independent think tank Ibon Foundation, said the peso strengthened from around 56 per $1 in 2005 to as high as P41 in 2008 to 2013, due mostly to the efforts and labor of overseas Filipino workers (OFWs) and business process outsourcing (BPO) workers.

Overseas remittances nearly tripled from around $7 billion annually in the early 2000s to nearly $20 billion annually from 2008 to 2013.

BPO revenues grew even faster, from just a few hundred million dollars in the early 2000s to over $15 billion by 2013.

Africa attributed the massive growth in gross international reserves from just around $16 billion in the early 2000s to over $83 billion by 2013 to this trend. This was the biggest increase in GIR in such a short period in the country’s history.

The problem is that this isn’t sustainable, as reflected in the peso’s general decline since the mid-2010s.

The population grows and needs more goods and services, which the domestic economy isn’t producing, so it needs to import them.

Yet agricultural and industrial decline means the economy isn’t really earning from exporting agricultural or industrial products (net exports by import-intensive foreign locators don’t really amount to much).

Filipinos still go abroad, but competition with other labor-exporting countries like India, Indonesia, Pakistan, and Bangladesh means incomes aren’t growing as much as before, aside from the pinch of the protracted global economic crisis.