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THE
government is dismayed by reports that certain
government-owned or -controlled corporations (GOCCs) and
even private-sector borrowers have obtained loans on the
strength of its sovereign guarantee.
The
discovery led Finance Undersecretary Roberto Tan to
disclose on Wednesday that the Philippine Export-Import
Credit Agency or Philexim will not hesitate to call off
such guarantees if fraud is involved.
In a
related development, lawmakers on Wednesday raised the
alarm against underperforming and loan-ridden GOCcs,
warning that unless quickly addressed, these GOCC debts
and deficits could place the country in an extremely
negative financial position.
Sen.
Edgardo Angara said the losses may be partially due to
“imprudence in debt-risk management” by the GOCCs since
their debts are automatically backed by government
guarantees. At least P418 billion in GOCC debts are
backed by government guarantees as of the first quarter
of 2007, he said.
Tan, who
is also officer in charge at the Bureau of Treasury,
told reporters it was important to safeguard the
resources of the government and that the Department of
Finance was “closely scrutinizing the viability of
projects needing government guarantees.”
He said
a review on the proposed P500-million loan of the
privately owned Platinum Group Metals Corp. uncovered a
suspected fraud that should disqualify the mining firm
from seeking state guarantee on its proposed loan.
According to Tan, the collateral that the Platinum Group
put up to boost the release of its loan from Deutsche
Bank and the Philippine Veterans Bank was rightfully
owned by another publicly listed firm, Oriental
Peninsula Resources.
But
documents show the Philexim board of directors approved
on April 30, 2007 the issuance of a state guarantee that
will allow the mining firm to finance its ferronickel
smelter plant project.
Tan said
the DOF may call off the guarantee if certain conditions
are not met, including an endorsement from the Office of
the Government Corporate Counsel, clearance from the
Department of Environment and Natural Resources and
from the local government, the endorsement of its own
board of directors and submission of a mining
development plan.
Tan said
the Platinum Group’s loan guarantee has been put on hold
as a result.
Philexim
has a new head as Malacañang has appointed Francisco
Magsajo Jr. to replace Virgilio Angelo who has been
named chairman of the Small Business Guarantee and
Finance Corp., Tan said.
Magsajo
was sworn in last January 3 by Finance Secretary
Margarito Teves.
On the
huge GOCC losses, meanwhile, Angara cited the National
Food Authority (NFA) which he said “is following the
footsteps of Napocor [National Power Corp.] as the next
financial fiasco to hit the government.”
“In a
2007 review of NFA’s operations, its projected
accumula-ted losses in 2007 amounted to P48 billion
while its outstanding loans is around P69 billion,”
Angara pointed out. “If NFA continues to operate as is,
it is projected that in the year 2010 its accumulated
losses will hit P111 billion and its outstanding loans
will reach P136 billion.”
In
tracing the role of recklessly issued government
guarantees in the swelling losses, Angara noted:
“As of
the first quarter of 2007, the government is backing
P418.364-billion GOCC debts.
This
could be a huge financial burden for the government if
these corporations don’t [clean] up their act,” he said.
Angara
argued that debts acquired by GOCCs should no longer be
automatically backed by government guarantee, as this
“allows GOCCs to be careless of their own debt.”
“GOCCs
should not just be more responsible in their debts, but
they should be accountable to the government as well.
Considering the volume and capacity of public resources
and activities undertaken by government corporations, it
is imperative that a formal mechanism be
institutionalized in the review and analysis of the
budgets of these GOCCs,” Angara said.
To
address the problem, Angara filed a bill amending
Section 13 of Presidential Decree 1177, otherwise known
as the Budget Reform Decree of 1977.
“In
addition to the annual budget of the national government
which the President is required to submit to Congress
[the basis for the enactment of a General Appropriations
Act], it shall also include in its budget submission the
proposed corporate operating budgets of government-owned
or -controlled corporations, their subsidiaries and
affiliated companies, which require national government
budgetary support,” he said.
The
Angara bill also requires these GOCCs to submit to
Congress separate and yearly financial performance
reports vis-a-vis their approved budgets, as well as
status reports on obligations they have entered into
which are backed by government guarantees. |
