Hybrid PPP scheme to speed up infra projects – DOF

The preferred hybrid public-private partnership (PPP) scheme of the Duterte administration is designed to speed up the implementation of the government’s big ticket infrastructure projects, according to the Department of Finance (DOF).

In an interview, Finance Secretary Carlos Dominguez defended the planned hybrid PPP mode of the government from criticisms.

Earlier, business tycoon Ramon Ang commented that the hybrid approach on PPP projects might affect the “good standing balance sheet” of the government.

Under the hybrid PPP mode, the government would build the infrastructure projects and later bid out the operation and maintenance to the private sector.

“Our goal is not so much to reduce the debt but to speed up the projects so that people can benefit right away and the experience of the past administration is the PPP projects take almost three years to start,” Dominguez said.

Unlike the past PPP projects, which took an average of 29 months to take off, Dominguez said the government wants to start right away with its plans.

“We are willing to take initial steps and spend the funds available to the government through loans, as well as through tax collections,” Dominguez said.

“That is why we have the CTRP (Comprehensive Tax Reform Program) so that we can raise revenues,” he added.

Dominguez said the Philippines has “a lot of headroom” to borrow because of its low debt-to-GDP ratio, which was recorded at 41.87 percent as of March.

The Department of Budget and Management earlier said the proportion of debt to the country’s GDP is expected to decline to 36.7 percent by 2022.

Dominguez pointed out the public sector enjoys lower interest rates and borrowing costs as against the private sector.

“So borrowing at lower cost, we can actually benefit the public and that will not stop us at any point for the projects. That cannot stop us form selling the project and going to PPP as long as it has been started already,” Dominguez said.

Dominguez added that the government’s borrowing mix would be 80:20, in favor of domestic sources.

The Duterte administration is planning to embark on an intensified expenditure program to sustain economic growth and reduce poverty in the country.