Opening a can of worms
Executive Secretary Eduardo Ermita yesterday said economic managers and mon-etary authorities will look into the possibility of giving "special" rates for the dollars remitted by overseas workers. What is there to study?The managers and Bangko Sentral officials do not even have to review their textbook in Economics 101 to shoot down the proposal out of hand. With Gloria Arroyo pandering to every politically powerful block, introducing multiple exchange rates is a foolhardy step down a precipitous slope. Let’s not even think of the economic consequences of multiple exchange rates. Let’s just imagine the effects of giving the corrupt administration additional powers to reward/punish economic units through multiple peso/dollar rates.
Let’s not fool ourselves with the phrase "special rates." It means OFWs will be given the privilege of exchanging their dollars for more pesos than the rate set, as determined by the market. We are familiar with the plaints of OFWs and their dependents. They used to get up to P56 for every dollar. Now, it’s only P45 to the dollar. This means that if an OFW is sending home $500 a month, his family is now getting P5,725 less than it used to. Clearly, OFW families are losers in the strengthening of the peso.
But that’s only one side of the coin. The other side is that OFW families are consumers, too. The stronger peso has resulted in the taming of inflation. Imported raw materials, especially fuel, are relatively cheaper. And this has a direct impact on the stabilization of the prices of basic commodities.
OFWs are borrowers, too, and they, as much as everybody else surely, must have benefited from lower interest rates. It’s now easier to buy television sets, DVDs, karaoke machines and other creature comforts on installment. Buying or building houses is also more affordable now with lower mortgage rates.
And surely OFW families must also be benefiting from what the government boasts as higher social spending in the wake of easier debt payments as a result of a stronger peso. These social dividends are enjoyed by families whose bread winners are not taxed on their income in the first place.
And after the OFWs, who’s next in line for "special" exchange rates? The exporters who at the moment are also being squeezed by their lower peso earnings on the same dollar receipts? And which specific exporters - agricultural producers, processors and traders? And producers of which specific crops – coconut and its products, sugar, bananas, pineapples, papayas, asparagus, etc.?
Before we know it, every interest group would be lining up at the Palace to plead for inclusion in the list of "special rate" beneficiaries.
It would be dollar quota of the 1950s and 1960s in reverse.
Wouldn’t it be rich, the current administration closing its regime of thievery by going back to a discarded system?
