(Bloomberg) -- Quickening inflation in the Philippines will likely prove temporary and the weak peso isn’t something to fret over, Budget Secretary Benjamin Diokno said.
“We expect inflation to normalize by the end of this year, I am not worried about it,” Diokno said in an interview in Washington on Friday. He pinned price rises on higher taxes on items including cars and beverages.
The government considers the peso’s weakness as manageable and mostly reflecting U.S. dollar movements rather than a weakening domestic economy, Diokno, 70, said at the International Monetary Fund’s spring meetings. "We are not worried about the weak currency."
President Rodrigo Duterte is boosting spending on roads and ports to a record this year to fix the nation’s decrepit infrastructure. The economy is forecast to expand more than 6 percent for a seventh straight year in 2018, putting it among the world’s fastest growing nations, but there are concerns rising inflation and a slump in the currency and stocks could check the expansion.
The peso has fallen more than 4 percent against the dollar this year, the worst performance among Asian currencies tracked by Bloomberg. The benchmark Philippine stock exchange index is down almost 10 percent this year.
The government is seeking to widen the annual budget deficit to 3 percent of economic output through 2022. To help finance the spending spree, a tax law designed to add 82.3 billion pesos ($1.6 billion) in revenue in 2018 was passed last year.
"We’re doing great on both sides, we have increased revenues by much more than we expected and we have cut under-spending," he said. "We won’t adjust our planned borrowing."
Read about how the budget deficit last year was narrower than the target
On U.S.-China trade tensions, Diokno said he doesn’t expect it to impact the Philippines, at least in the near term.
"I don’t know where the trade dispute is going quite frankly," he said. "President Trump keeps changing his mind."
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