Summing up national sentiments in the simplest of terms in the aftermath of Friday's de facto devaluation of the peso, Philippines central bank governor Gabriel Singson said: 'Some people are happy, others are not.' There is a clear distinction between winners and losers from last week's decision by Bangko Sentral ng Pilipinas to bow to speculative pressure and give up its determination to prop up the overvalued peso at about 26.40 to the US dollar and allow it a freer float. The weaker national currency will make imports more expensive, which could translate into higher fuel costs, higher consumer prices and, what is feared most among local industrialists, higher wage demands. This could send inflation climbing in the short term from its present low of 4.5 per cent. Economists and opposition politicians warn that this could stunt economic growth. Companies with high US dollar debt exposure will also naturally suffer, as their debt burden has automatically shot up overnight. There could be some defaults. Others might simply just choose to not roll existing loans while they expire. However, far fewer companies in the Philippines have unhedged large US dollar-debt exposure than in Thailand, where total short-term and long-term external debt has been estimated at US$62.5 billion. In the Philippines, there is estimated to be about $11 billion in foreign denominated debt in the banking system's books, comprising 27.5 per cent of all loans. On the other side of the coin, exporters are delighted as it makes their goods more competitive in international markets in real terms. It also makes the Philippines a cheaper and more attractive place for multi-nationals to choose as a regional base or to invest in. Trade and Industry Secretary Cesar Bautista has projected that the Philippines' trade deficit was likely to improve as a result of an improvement in the country's export performance. Possibly happiest of all will be the Philippines' 5.5 million band of overseas workers, including the army of maids in Hong Kong, as the money they earn abroad and remit home to their families will go a lot further when exchanged back into their local currency. 'Our overseas workers are very happy,' Mr Singson said. Remittances from overseas workers normally account for about a third of the Philippines' foreign exchange earnings, making them vital to the overall health of the economy. Overseas workers sent back a total $4.3 billion last year, according to central bank official figures. It is rumoured that one of the causes for the central bank's prompt decision last week was the fear that overseas workers might have held off sending pay packets home while uncertainty lingered over a possible devaluation. The real estate market may also benefit. In times of heavy currency volatility, Philippine investors have used the property market as a hedge. Unlike Thailand, most property developments have not been financed in US dollars. This could provide the heavily over-supplied sector with a much-needed boost, although probably not enough to dig it out of its cyclical decline. Despite the evident long-term benefits to the economy from the central bank's move, the prime focus of the papers in Manila has been on the likely detrimental impact on inflation. 'Fuel prices are likely to go up quickest,' the chairman of one of the Philippines' biggest conglomerates said. 'And you've got to watch wages.' The country enjoyed an average inflation rate of 4.6 per cent for the first six months of this year. Mr Singson said the central bank was still sticking with its original full-year forecast of 6-7 per cent, which, given the strong performance, could still be achievable even if there was some significant slackening during the remainder of the year. What is more of a concern is next year's inflation figures, which could suffer from the double whammy of a presidential election as well as higher import costs. Public-sector spending normally shoots up in the Philippines ahead of elections to help woo votes. Deutsche Morgan Grenfell (Philippines) senior analyst Mike Oysen said: 'Money supply normally goes up around 30 per cent. They print more money to build bridges and roads and other things to please the electorate.' As for fears of higher wage demands, government workers have used the peso's fall as an excuse to join the clamour by private-sector employees for a salary increase to cope with the consumer costs. The Confederation for Unity, Recognition and Advancement of Government Employees has been calling for a 2,500-peso rise in basic pay for government workers since May, following the full deregulation of the local oil industry, which has resulted in higher fuel costs. The de facto devaluation is expected to raise fuel prices another 60 centavos a litre to 1.30 pesos. The National Wages and Productivity Commission has ruled out any immediate wage adjustment, saying it is premature to determine the effect on workers' income. However, the militant Kilusang Mayo Uno and Koalisyon ng Progresibo Makabayang Managgagawa have vowed to mobilise 10,000 workers to stage a rally during the reopening of Congress on July 28 to press their demands. The Philippine Government may have appeased foreign currency speculators, but now it has a big domestic fight on its hands.