By Justine Irish D. Tabile, Senior Reporter
A SUSTAINED PESO depreciation could drive up the government’s debt-servicing and procurement costs next year, potentially forcing it to reassess spending priorities and rely more heavily on domestic borrowing, economists said.
“A weaker peso could increase the government’s fiscal burden by raising the peso cost of foreign currency-denominated debt servicing, infrastructure loans, and imported goods such as fuel and equipment,” Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, told BusinessWorld.
“It could also add to inflationary pressures by increasing government procurement and subsidy costs,” he added.
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