Philippine News Roundup −21 May 2008

The country now has an additional 1,268 Certified Public Accountants, the details of which are in this list.

The Dollar has risen (P43=$1). Despite the Central Bank's intervention, the US dollar rose to P43 due to the rising cost of petroleum in the world market. Yesterday, the Bangko Sentral ng Pilipinas (BSP) sold $100 million in the Philippine Dealing System in the hope of helping meet the demand for the currency. All in all, $715 million worth of transactions was consummated and the government's intervention measures hardly made a difference. At most, it was only able to prevent a further decline in the peso since the dollar sold at P42.99 from the start of the day (and closed at P42.81). In the local banks, the dollar can be expected to sell for approximately P43.50 within the day.

The Philippines' local fuel production hardly meets the local demand, forcing it to regularly buy huge volumes (in dollars). This increases the country’s requirement for US currency causing the dollar’s value to rise. In the years 2006 and 2007, the US dollar declined to approximately P40 (from P50) due to the general weakening of the US economy, record remittances of the Filipino overseas workers and strong exports. Every fall of the US dollar made the Philippines absorb most of the increase in fuel prices and stabilize the cost of products in the local economy, which is largely dominated by imported products. With the current appreciation of the dollar, a reverse effect can be expected. Philippine products can be anticipated regain some of its competitiveness and start selling in the export market. However, the increase in oil prices will now be fully felt and cause further increases in the prices of domestic commodities, etc.

It has been determined in the study that for for every 10% increase in local prices, a few million Filipinos are added to the poverty list

. Now, let us hear what the angry proponents of a higher dollar have to say.

As a further measure to manage public finances and prevent further inflation, the government has decreased by 70% (January to April) its subsidies to state corporations. Let's hope that the trend is sustained until the end of the year.

In regard to the rice issue, the government seems to be pursuing government to government transactions in order to avoid falling into the hands of speculators in the world market. It is now taking on Japan's initial offer to sell rice and has in fact asked for an increased quantity. The Philippines is now formally asking Japan to sell 200,000 tons. Restrain your appetite folks. Japan will be exporting rice that it imported from other countries. The famous Japanese rice will remain in Japan.

Going to the Meralco controversy, yesterday's cabinet meeting resulted with the president passing the issue to the NEDA core group for further study. Former NEDA chair Romy Neri was interviewed on television stating the need for a review of of the power firm but Meralco director Christian Monsod had not so nice words to say.

“Secretary Neri does not know his facts… I think he better correct his facts because he is, I think, 10 years or five years behind in his facts, as usual he did not do his studies,” he said.

Monsod said that Neri got his facts wrong on the ownership of the Lopez group in Meralco. He said Neri also called for a review of contracts with independent power producers (IPPs) when in fact all of them had been reviewed and renegotiated.
“He doesn't seem to know that,” said Monsod. He said the review committee was then headed by Finance Secretary Margarito Teves.

With that, the public can expect the controversy to drag for some more months. One thing is for sure, the Lopezes are not going down without a good fight.