"The government also upgraded its GDP growth target for next year to 6.3-7.0 percent from 6.1-6.8 percent with brisk domestic demand seen making up for weak exports stemming from a US slowdown.
Exports are expected to grow by 8 percent and imports by 9 percent under the revised target for
2008 which policy makers approved on Friday. The forecast is also anchored on an inflation target of 3-5 percent and benchmark Dubai oil prices averaging 80-90 dollars a barrel, Santos said.
The peso is projected to trade at 42-45 to the dollar next year, weaker compared to current levels.
The local currency hit a high of 41.40 to the dollar in morning trade Monday, losing some ground after hitting a seven-and-a-half-year high of 41.13 on Friday.
The best performer among Asian currencies, the peso has gained more than 18 percent so far this year and looks set to conquer more ground in the coming days as overseas-based Filipinos send more money for the Christmas holidays to their families in the Philippines.
Halting peso's rise
Santos said the government is planning to pay more loans ahead of their maturity to halt the
peso's rise.
'We intend to prepay more foreign loans of the central bank and the government to create downward pressure on the peso,' he said. He did not provide details.
Last week, Finance Secretary Margarito Teves announced that the government would cut the share of foreign borrowings in its financing program next year while increasing the share of domestic borrowings as part of measures to temper the continued strength of the peso.
The government will reduce the ratio of its foreign borrowings to 30 percent next year from 36 percent this year, while increasing the share of domestic borrowings to 70 percent from 64 percent, Teves said.
The government is also reviewing loan agreements with foreign creditors to limit dollar inflows, Santos said
'To stem the strength of the peso, we are looking very closely at those ODA (official development assistance) loans, many of which are dollar-denominated. We are evaluating very carefully (the need) to limit ODA loans to those that are necessary for the Philippines,' he said.
'Dollar loans to pay for foreign goods and services, maybe yes, but dollar loans coming into the system in the form of cash, that is something the government should watch out for,' he said.
Santos said the government is 'comfortable' with an exchange rate of 42-45 pesos per dollar.
But the worry is that the peso could strengthen further given the strong inflows, bulk of which are in the form of remittances from Filipinos working abroad."
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