Business World Online
Posted on July 31, 2011 10:52:43 PM
BY DIANE CLAIRE J. JIAO, Reporter
THE COUNTRY could borrow more than what has been set for next year as state-owned Power Sector Assets and Liabilities Management Corp. (PSALM) has secured Development Budget Coordination Committee (DBCC) approval to course its loans through the national government.
“[The borrowing plan for] PSALM has been approved by the DBCC,” Finance Undersecretary Rosalia V. de Leon told BusinessWorld on Friday, adding that this wasn’t included in the 2012 borrowing plan released earlier in the week.
“The only concern of the DBCC was the treatment of the borrowing because they didn’t want it to impact on the national government’s debt or fiscal deficit,” Ms. de Leon added.
The DBCC, she explained, greenlighted the request after consultations with various entities such as the International Monetary Fund and the Department of Justice. The national government would be the borrower on record but the funds would be relent to PSALM so it would not be added to the public debt stock, Ms. de Leon added.
She claimed it would also have no impact on the deficit, which the government is targeting to cap at P286 billion next year or 2.6% of gross domestic product (GDP).
The Department of Finance has proposed coursing the borrowings of select state firms through the national government in a bid to bring down their borrowing costs. Ms. de Leon previously estimated that the government could secure interest rates 50 to 75 basis points lower than what state-owned firms would get.
The government will borrow to finance PSALM’s operations and maturing obligations next year, Ms. de Leon said. There is no final figure yet negotiations are continuing.
PSALM has to settle $3 billion in obligations this year, mainly due to National Power Corp.’s maturing debts, as well as its own contracts with independent power producers.
The state-owned firm already raised P20 billion through five-year and seven-year peso-denominated retail Treasury bonds in April. In 2009, it also issued $1 billion worth of 10-year global bonds.
Ms. de Leon stressed that the Department of Finance would not “open the floodgates” for all state-owned firms to borrow through the national government.
“PSALM has its own revenue stream and they will be paying this debt,” she said, contrasting it to debt-laden National Food Authority (NFA) which was also hoping to course its borrowings through the government.
The grains agency’s proposal was nixed by the DBCC. “In the case of NFA, we would have had to advance their debt payments,” Ms. de Leon pointed out.
The NFA is seeking to raise P75 billion this year to refinance its debts in order to lengthen maturities and lock in lower interest rates. The state firm is already buried in debt amounting to roughly P154 billion.
The government wants to raise P174.8 billion from external sources next year, with roughly P97.9 billion via global bonds. A total of P529.5 billion will come from the domestic market.
“The only concern of the DBCC was the treatment of the borrowing because they didn’t want it to impact on the national government’s debt or fiscal deficit,” Ms. de Leon added.
The DBCC, she explained, greenlighted the request after consultations with various entities such as the International Monetary Fund and the Department of Justice. The national government would be the borrower on record but the funds would be relent to PSALM so it would not be added to the public debt stock, Ms. de Leon added.
She claimed it would also have no impact on the deficit, which the government is targeting to cap at P286 billion next year or 2.6% of gross domestic product (GDP).
The Department of Finance has proposed coursing the borrowings of select state firms through the national government in a bid to bring down their borrowing costs. Ms. de Leon previously estimated that the government could secure interest rates 50 to 75 basis points lower than what state-owned firms would get.
The government will borrow to finance PSALM’s operations and maturing obligations next year, Ms. de Leon said. There is no final figure yet negotiations are continuing.
PSALM has to settle $3 billion in obligations this year, mainly due to National Power Corp.’s maturing debts, as well as its own contracts with independent power producers.
The state-owned firm already raised P20 billion through five-year and seven-year peso-denominated retail Treasury bonds in April. In 2009, it also issued $1 billion worth of 10-year global bonds.
Ms. de Leon stressed that the Department of Finance would not “open the floodgates” for all state-owned firms to borrow through the national government.
“PSALM has its own revenue stream and they will be paying this debt,” she said, contrasting it to debt-laden National Food Authority (NFA) which was also hoping to course its borrowings through the government.
The grains agency’s proposal was nixed by the DBCC. “In the case of NFA, we would have had to advance their debt payments,” Ms. de Leon pointed out.
The NFA is seeking to raise P75 billion this year to refinance its debts in order to lengthen maturities and lock in lower interest rates. The state firm is already buried in debt amounting to roughly P154 billion.
The government wants to raise P174.8 billion from external sources next year, with roughly P97.9 billion via global bonds. A total of P529.5 billion will come from the domestic market.
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