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11.10.2006

Government Borrowing & Commitment Fees Again

The Philippine Daily Inquirer reports today, that the Philippine government is set to borrow $250 Million from the WB. If the commitment fees paid, as of the year 2002, was invested in mutual funds that gained an average of 40% per year (PhilEquity), it would have been close to saving the Filipino from this particular loan. Now, if all the other commitment fees paid on 2003~ present will be taken into consideration...

Let us take note that the US$ is going through a devaluation. However, it is very well capable of rapid recovery and increase (by leaps and bounds). If that happens, the interest payments for the $250M loan, as well as future Peso devaluations can easily defeat the gains made this year.

While not meaning to sound so angry about the whole thing (I am not), let us remember that the present minimum wage is Php275 and the exchange rate is PhP49=US$1.00. If we will simply distribute $250 Million to the populace, it would be enough to feed 123,737 Filipino families, for one year.

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