Philippines' budget secretary says not worried about peso depreciation

Philippine Budget Secretary Benjamin Diokno said on Friday he is not worried about the weakening peso because the country has enough buffers and a steady source of foreign exchange inflows. Diokno added he does not see the peso's weakness having an adverse impact on the government's infrastructure spending plan, with the country less reliant on foreign loans.
The Philippine peso hit eleven year lows this week, partly due to a widening goods trade deficit. "I am not worried about the peso depreciation," Diokno told a media briefing. "Crisis, or no crisis, we are ok." Diokno said the weak peso should benefit the country's exports and boost the purchasing power of recipients of money sent by Filipinos working and living abroad, boding well for the consumption driven economy.
The Philippines, Diokno added, enjoys an adequate level of foreign reserves and a steady stream of inflows from remittances and receipts from the business process outsourcing sector. Foreign reserves of $81.4 billion at end-June can cover 8.7 months worth of imports of goods and payments of services, central bank data showed, while remittances rose 4.2 percent in the first four months to $9.04 billion.
The government will submit its proposed 3.77 trillion pesos ($74.57 billion) budget to congress on July 24, Diokno said, the day President Rodrigo Duterte is due to deliver his annual state of the nation address. Duterte, who has been in office one year, has vowed to usher in a "golden age of infrastructure" and spread wealth more evenly in the country of more than 100 million people. The planned 2018 budget, which compares with this year's 3.35 trillion peso spending plan and assumes a budget deficit of 3 percent to GDP, would be funded by revenues and debt, Diokno said.
Borrowings from local and foreign creditors were expected to rise to 889.7 billion pesos next year, up 22 percent from this year's borrowing plan, with 80 percent of the total to be sourced domestically, according to government documents. Manila is looking to keep the 80-20 borrowing mix, in favour of local debt, until 2022, when Duterte's six-year term ends and when government borrowing is programmed to reach about 1.21 trillion pesos.