IMF presses privatization of PNB

The International Monetary Fund (IMF) has strongly urged the National Government to fully privatize the Philippine National Bank (PNB) as soon as possible.

Visiting IMF mission head Markus Rodlauer said the government needs to raise funds to narrow the budget deficit.

The government’s budget deficit widened to P82.9 billion as of last month way above the P62.5-billion target for this year. "The plan to privatize PNB as soon as possible remains at a fast rate. This would be better for the bank and the budget (or cash position of the National Government)," Rodlauer said.

He pointed out that PNB has been in historical difficulty. "PNB has a history of long-term financial difficulties. It’s the third time around that this bank is in serious financial trouble. (The challenge now) is to turn it around and make it healthy again," he said.

If fully privatized, Rodlauer said PNB can proceed more effectively with its rehabilitation. "Now, after two and a half years, the time has finally come when a true rehabilitation can begin. It is now fully capitalized and in line with international norms to keep its business going."

The privatization of PNB was among the conditions tied to country’s economic program worked out with the IMF and the World Bank.

Finance Secretary Jose Pardo said they plan to hold on to the PNB shares until market conditions recover from the present lull. Another plan, Pardo said, is to allow majority owner Lucio Tan to buy the remaining government’s share by 2002 in case no buyers come out.

The government, he said, can also buy back (call option) the new PNB shares which the government was entitled to during the recently concluded stock rights offering. Tan bought those shares instead along with all the shares which the other stockholders did not buy.

IMF commented, though, that to some extent the National Government’s PNB deal with Tan was somewhat "regrettable".

Rodlauer said PNB is in a position now to implement a rehabilitation package to recover from its losses. – Donnabelle Gatdula