Government plans to merge GFSME, SBGFC

Government wants to merge two government financial institutions providing financing primarily for small and medium enterprises (SME), Trade and Industry Secretary Manuel Roxas II said yesterday. Roxas said there is a proposal to merge the Small Business Guaranty Fund Corp. (SBGFC) and the Guaranty Fund for Small and Medium Enterprises (GFSME) to avoid duplication of their functions and pool all the financing resources for SMEs.

The GFSME was formerly under the Office of the Executive Secretary and was only recently transferred to the Department of Trade and Industry (DTI).

The DTI, however, already has the SBGFC. Thus, with the transfer of the GFSME to the DTI, Roxas felt that it is only logical to merge the two financial institutions.

Among Roxas’s priority in the DTI is providing additional financing for the SME sector which has been complaining that it has been neglected by the government in the past.

Aside from the planned merger of the SBGFC and the GFSME, Roxas said that the government is also planning to lift the current prohibition on providing government guarantees.

"The prohibition on providing guarantees was imposed a couple of years back as part of government’s effort to limit its contingent liabilities," he explained, adding that "without the ability to provide guarantees, the very mandate of institutions like the SBGFC, GFSME and other government guaranty corporations such as the Philippine Export Guaranty Corp. (Philexport) is hampered."

Lifting and prohibition would need the consent of the Department of Finance and the Department of Budget and Management.