POSTSCRIPT / November 29, 2005 / Tuesday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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With $12B, OFWs now second only to electronics

POSITIVE IMPACT: The peso’s appreciation and the resulting savings have emboldened President Gloria Arroyo to tell her financial managers to see if a few foreign loans could be partially paid before due date — to lessen the country’s debt burden.

To report this bit of finance stuff to the ordinary Filipino, we say that the improvement of the peso’s exchange value to around P54.15 to the US dollar (compared to almost P56 some time back), has suddenly reduced the peso equivalent of our foreign loans.

The savings arising from the peso’s dramatic appreciation have been estimated at P40 billion. About a month ago, President Arroyo recalled, savings were already in the vicinity of P35 billion when the peso started to climb.

Aside from reducing, even just slightly, the consolidated public sector debt — estimated at almost P6 trillion by some NGOs monitoring it! — a pre-termination could have, hopefully, a positive psychological impact on the people and our foreign creditors.

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PAY A PENALTY: But President Arroyo told us over lunch yesterday that it does not look as simple as digging into one’s pocket and paying off a loan.

For one, there is a penalty for pre-termination. Bankers, some of whom legend says have a heart of stone, must make money. Borrowers’ paying off loans ahead of schedule upsets the gravy train. The borrower who pre-terminates usually has to pay a penalty.

For another, paying now would eat into the surplus that has been building up with the improvement of the economy’s performance over the last quarter.

National Treasurer Omar Cruz has said that the government may be able to reduce its projected deficit from P180 billion to P140 billion by yearend. Early payment may make us look “guapo,” but could push up again the deficit.

Even with those negative points, pre-termination as a sign of faith in the resurgent economy remains an option of the Arroyo administration before the year ends.

But my guess is that the administration will not make a pre-termination. And if it does not take this option next December, it may not be able to do it early in the coming year.

The surge in dollar remittances in time for Christmas spending can be expected to slow down after the holidays. With the reduced velocity of post-holiday remittances, the peso may dip to correct its current climb.

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NO. 2 EARNER: The President was buoyant with data showing that some $10 billion is expected to come in this year from overseas Filipinos sending dollars back home. (“Dollar” is used here as a generic term to cover all foreign currencies.)

That figure includes only foreign currency being sent through the formal channels, such as banks. If money sent via informal media, such as “padala” through homecoming friends and relatives, is included, the total inflow from overseas Filipinos could easily reach $12 billion. Two-thirds of that amount comes from Filipinos in North America.

At $12 billion, the President said, the remittances of Filipinos abroad make them the country’s No. 2 dollar-earner, second only to electronic exports that are expected to fetch something like $20 billion this year.

Remittances of overseas Filipinos have overtaken coconut products and garments, two of the country’s traditionally stronger exports.

Now you know why the Arroyo administration nearly broke an arm pushing a law granting dual citizenship for Filipinos holding a second citizenship and another law allowing qualified Filipinos abroad to vote in Philippine national elections.

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ROSY PICTURE: It seems from the figures coming in that the economic picture is growing rosier by the day toward yearend.

Even sports is chipping in, with the Philippine contingent in the ongoing Southeast Asian Games fetching five gold medals on opening day and proceeding to reap more of them in later events.

On the hard economic court, the peso as we have mentioned is rebounding like a gazelle, making it the darling of Asian currencies at the moment.

The stock market is on a roll. It may not bring in the same solid investments that translate right off into factories, jobs and infrastructure, but the foreign funds it attracts show how much confidence the outside world has for the local market.

Compared to the giant markets in other financial capitals, ours is not really something to be excited about. So now its managers — with the government prodding them — are looking for ways to add variety and volume to the bourse’s offerings.

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STABLE PRICES: On the consumer level, which is the real world as far as Juan Pasang Krus is concerned, the key ingredient is still retail prices, assuming real wages do not fluctuate radically.

With government on the watch, inflation (which means “price increase” to the man in the street) has been kept more or less within manageable levels despite hostile factors all around.

After successive weeks of creeping 50-centavo (per liter) price increases, the prices of motor fuel surprised everybody with several pump price reductions ordered by the oil companies without need for government regulatory agencies to suggest it.

The only fly in the oily ointment is LPG (liquefied petroleum gas), or cooking oil, whose price either went up or stayed, even as the prices of motor oil and fuels were going down.

The price of most food items have been more or less stable.

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COSTLY POWER: While the peso keeps appreciating and consumer prices are either stable or sliding (notably in the case of oil-based fuel) despite the imposition of an expanded Value-Added Tax, the price of electricity remains high and is even threatening to go up.

When we pointed out to the President this seeming exception of electricity in the generally stable levels of consumer prices, she made some phone calls to officials having to do with energy.

She then came back to us to explain why, for instance, the National Power Corp., long marked for privatization, is still in the hands of government and certain officials perceived to be reluctant to let go of their fat hostage.

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BIDDING SET: The President told us two things, that: (1) the Napocor will finally break even this year, something that I found startling, and (2) the terms of reference for the bidding out of Napocor’s generating units will be published on Dec. 8.

Mark Dec. 8 on your calendar, because I have a feeling that whoever the President called for an update on Napocor’s privatization pulled the date from a hat even if they were not really ready for a public bidding. I hope I am wrong.

The President explained the long delay in removing Napocor — through privatization — from the top of the list of government White Elephants, but I did not understand the explanation. So bear with me that I cannot explain it either.

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CHIEF JUSTICE: What are President Arroyo’s thought on the retirement of Supreme Court Chief Justice Hilario Davide Jr. on Dec. 20? What are the criteria that will guide her in appointing Davide’s replacement?

She was not to be waylaid by such a question. She parried it by simply saying that all the jurists on the short list prepared by the judicial and bar council that screened them were all qualified.

On the list are Associate Justices Artemio Panganiban, Reynato Puno and Leonardo Quisumbing. I am sure Ms Arroyo has more or less made up her mind already, but she was correct in not giving a hint of it.

This kibitzer thinks that what the Supreme Court needs at the moment is a reform-minded manager or administrator who can guide, maybe sometimes even whip into line, the judges in the lower courts and the 28,000 personnel of the SC.

Using an analogy in a field familiar to me: A good writer (or columnist) does not necessarily make a good editor; a good editor does not necessarily make a good editor-in-chief; and a good editor-in-chief does not necessarily make a good publisher. The journalist being considered for the top post of a media organization must be a good manager.

In addition, the incoming Chief Justice must have reform in his bones. I am referring to reform both of judges and of the judicial system.

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(First published in the Philippine STAR of November 29, 2005)

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