Project bonds not needed ‘for now’

Business World - - FRONT PAGE - By Melissa Luz T. Lopez Se­nior Re­porter

THE GOV­ERN­MENT is not keen on of­fer­ing bonds to fund bigticket in­fra­struc­ture projects, Na­tional Trea­surer Ros­alia V. De Leon said yesterday, not­ing that the coun­try con­tin­ues to have enough money to sup­port pub­lic spend­ing plans.

“For now, we are not re­ally look­ing into project bonds be­cause these are re­ally fo­cused on fi­nanc­ing for a par­tic­u­lar project… That’s some­thing that we can explore, but the cost struc­tures would have to be eval­u­ated to en­sure that these are cost-ef­fec­tive [com­pared] to what we are get­ting from our gen­eral is­suances,” Ms. De Leon said dur­ing a we­bi­nar hosted by BPI Cap­i­tal Corp.

The gov­ern­ment gen­er­ates fresh funds from the sale of Trea­sury bills and bonds ev­ery other week, as part of the P727.64-bil­lion bor­row­ing plan for 2017.

Ms. De Leon as­sured in­vestors that the Philip­pines is in “a po­si­tion of strength” with am­ple re­sources and healthy debt pro­file to sup­port the gov­ern­ment’s P8.44- tril­lion 2017- 2022 in­fra­struc­ture spend­ing plan un­der the “Build, Build, Build” ini­tia­tive of the ad­min­is­tra­tion of President Ro­drigo R. Duterte.

The fis­cal bal­ance is ex­pected to be main­tained with the bud­get deficit pro­jected to re­main within three per­cent of gross do­mes­tic prod­uct (GDP) an­nu­ally de­spite big­ger spend­ing, Ms. De Leon added, as the Trea­sury’s fundrais­ing and fresh rev­enues from tax re­forms pro­vide fresh liq­uid­ity.

“The fi­nanc­ing comes as a sec­ondary is­sue be­cause what’s im­por­tant is to get these projects off the ground,” Ms. De Leon said.

“For­tu­nately for us, we have the re­sources and the fis­cal where­withal to be able to build, build, build, so it’s not an is­sue for us any­more.”

The gov­ern­ment will tap some $1.81 bil­lion in of­fi­cial de­vel­op­ment as­sis­tance ( ODA) in 2018 alone, Ms. De Leon said, not­ing that loans se­cured via Chinese and Ja­panese ODA come with be­low-mar­ket in­ter­est rates, hence, pro­vid­ing more “cost-ef­fi­cient” fund­ing sources.

BPI Ex­ec­u­tive Vice-President Den­nis Gabriel M. Mon­te­cillo said banks will not nec­es­sar­ily run out of op­por­tu­ni­ties to take part in the in­fra­struc­ture boom de­spite the gov­ern­ment’s pref­er­ence for for­eign grants, say­ing that they can still lend to sup­pli­ers and real es­tate de­vel­op­ers apart from pri­vate con­struc­tion firms.

Fer­di­nand A. Pec­son, ex­ec­u­tive di­rec­tor of the Pub­lic-Pri­vate Part­ner­ship (PPP) Cen­ter, added that PPPs still have a role to play in the in­fra­struc­ture story par­tic­u­larly through op­er­a­tion and main­te­nance ( O& M) con­tracts, as the gov­ern­ment seeks to tap the ex­per­tise of com­pa­nies in run­ning day-to-day work in new fa­cil­i­ties.

The O&M con­tract for Clark In­ter­na­tional Air­port in Pam­panga will be the first to be of­fered to pri­vate- sec­tor in­vestors un­der the Duterte ad­min­is­tra­tion’s hy­brid PPP model, Mr. Pec­son added.

NEW IS­SUES

Plans to float spe­cial­ized debt pa­pers re­main on the table as the Bureau of the Trea­sury read­ies pa­per­work in this re­gard, Ms. De Leon said.

She told reporters on the side­lines of yesterday’s Trea­sury bill auc­tion that her of­fice has yet to take up with the Depart­ment of Bud­get and Man­age­ment (DBM) the planned of­fer­ing of long-term bonds that would raise funds for the multi-year re­ha­bil­i­ta­tion of Marawi City, which is cur­rently ex­pe­ri­enc­ing the fourth month of bat­tle be­tween gov­ern­ment forces and Is­lamic State-in­spired mil­i­tants.

“We will be dis­cussing with Sec­re­tary (Ben­jamin E.) Dio­kno re­gard­ing the author­ity, be­cause we need the author­ity in terms of where it will be spent,” she ex­plained, adding that the tenor, among other de­tails, is be­ing de­ter­mined.

Ear­lier this month, Fi­nance Sec­re­tary Car­los G. Dominguez III said he was con­sid­er­ing the is­suance of P30 bil­lion in “pa­tri­otic” bonds to sup­port the re­cov­ery of war-torn Marawi.

The DBM had pre­vi­ously said that the gov­ern­ment will re­lease at least P15 bil­lion for the city’s re­ha­bil­i­ta­tion in the next two years, on top of the Chinese gov­ern­ment’s do­na­tion worth P15 mil­lion and the Ja­panese gov­ern­ment’s $2 mil­lion.

At the same time, Ms. De Leon said the Trea­sury is also pre­par­ing doc­u­ments for the maiden is­suance of panda bonds — yuan­de­nom­i­nated debt pa­pers to be sold to Chinese in­vestors — as the gov­ern­ment looks for a “clear mar­ket” and op­por­tu­nity to pro­ceed with the plan.

In April, Mr. Dominguez had said he wants these pa­pers of­fered by the “third or fourth quar­ter” this year, worth $200 mil­lion and with tenors of three and five years.

The gov­ern­ment plans to se­cure a fifth of its bor­row­ings from for­eign sources this year, while 80% will be bor­rowed from the do­mes­tic mar­ket in an ef­fort to limit the coun­try’s ex­po­sure to ex­ter­nal shocks.

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