24 February 2004


Max Soliven of the Philippine Star writes in his column tomorrow that “a major reason – probably the major reason – for the plummet of our Philippine peso was the runaway and astounding losses of the government-run National Power Corporation (NAPOCOR).”

He said that NAPOCOR lost P90 billion in 2003 and will probably lose anywhere between P150 to P200 billion this year.

He insists that “it’s not political instability, not even the candidacy and the possible victory of an allegedly "ignorant" and untried FPJ nor the open-ended threat of coups. It’s the reality of the monstrous and mystifying losses, plus mounting foreign debts and debt-servicing of the giant NAPOCOR,” as the main reason for the rapid peso slide.

He reveals that “The delay in the privatization of NAPOCOR assets could mean total annual costs of another P50 billion, or P25 billion in foregone savings due to financing costs and another P25 billion in annual losses. In all, NAPOCOR results in a $3 billion burden for the government this year.” According to him, the Arroyo government has sought the help of the Asian Development Bank (ADB) and the Dutch financing firm ING Barings for loans amounting to $250M.

More debts and no capital infusement at all drives the Philippine peso down, down, down.

He also admitted that the Central Bank albeit unobtrusively, continues to defend the peso against the dollar, despite announcements that it is not intervening. He said a prominent businessman friend told him that “after the elections, when the government stops desperately propping up the peso, the exchange rate could go as low as P70 to the dollar."


And here I am already feeling jittery as we approach the P60 level.

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