Measures Needed to Mitigate the Dollar's Decline

Her Excellency Gloria Macapagal Arroyo
President, Republic of the Philippines
Malacanang Palace, Metro Manila
Philippines


Dear Madam President:

We are writing to you today to raise our concern over the continued appreciation of the peso to a level which is now hurting each and every one of us Overseas Filipinos and our families.

The following realities will help you appreciate the predicament we are in:

Ø While our salaries during the last few years remained the same, our cost of living here in the Kingdom, like anywhere else, have increased. This means less income available for remittance to our families back home;

Ø The situation became worse when the peso appreciated from 55 to 45 versus US dollar during the last ten months. The continued peso appreciation effectively reduced the value of our remittances by an average of 18%;

Ø On the other hand the rising prices of commodities back home, which ironically should have decreased due to the strengthening of the peso, aggravated further the already worsening situation;

Ø We estimate that with the 18% reduction in the value of our remittances plus, say a 10% increase in household expenses of families back home, an OFW who used to remit $300 monthly, will now have to send $405 to maintain his family’s current living standard. To be able to do this, he will have to work longer hours and/or tighten his belt.

Ø For those of us who have planned to go back home for good within the next couple of years, will now have to reconsider our plans, and might have to extend our stay here in the Kingdom for a few more years.

We believe that a strong peso will help improve our country’s balance of payments, and allow the government to service the country’s debts at a lower cost. However, we also believe that the gains the government will earn from its debt servicing agreements must not be at the expense of those providing those benefits. It must not be at the expense of us Overseas Filipinos and our families.

We therefore respectfully request your good Office to look into ways and means to mitigate the negative impact of the continuing dollar decline on our remittances. Please ask the appropriate officials in your cabinet to study how the following alternatives may be implemented:

Ø Special exchange rate for OFW remittances;
Ø Peg the Peso – Dollar exchange rate at P50 to $1;
Ø Creation of an OFW Stabilization Fund, like the one proposed for the export sector;
Ø Provision of incentives or rewards based on the amount of OFW remittance, in order to encourage OFWs to continue remitting the same amount to their families.

We believe that with enough political will, your good Offices will be able to find a solution to this problem which is most equitable to all affected parties.

Thank you for your time, and may God bless you and your family.