$500-M JBIC loan facility for RP remains untapped

A $500-million loan facility from the Japan Bank for International Cooperation (JBIC) remains untapped because government has almost used up all the guarantees it is allowed to extend.

Under the Foreign Borrowings Act, a limit is set on the amount of gurantees government can issue. The National Government is nearing the ceiling set by law.

"There is a huge demand for guarantees so the Department of Finance (DOF) and the National Economic and Development Authority (NEDA) are looking at withdrawing guarantees on untapped or unutilized loans," explained Remedios L. Macalincag, president and chief executive officer of the Development Bank of the Philippines (DBP). The DBP is the designated recipient of the $500-million JBIC V loan.

Macalincag said there are several projects worth a combined amount of P15 billion awaiting the release of the JBIC loan package which is intended for several IT (information technology) park development, schools and hospitals.

The bank is also the recipient of a $183-million, six-year loan package from the World Bank for the development of potable water for the local government units (LGUs).

Meanwhile, net income of the state-run development bank grew by 96.35 percent, or from P329 million in the first four months of 2000 to P646 million in the same period this year.

The dramatic increase in earnings was attributed mainly to high interest rates, high cash flow recovery, a 25-percent increase in loan portfolio, and near absence of non-performing loans (NPLs).

However, the net earnings are seen to go down as interest rates are perceived to drop to single digit levels.

"When interest rates are lower, the spreads of the bank are also lower," the DBP president said. "But it will be lower the rest of the year, so our spreads will be lower."

Net earnings for the entire 2000 grew by 42 percent to P1.46-billion from the previous year.

Macalincag said the bank’s net income for the first four months is on track for its target of a P1.6-billion net income for the entire year 2001.

As of March 23 this year, the bank had total assets of P169.5 billion against liabilities of P153.3-billion. It had NPLs worth P7.6 billion or 8.6 percent of total loan portfolio way below the industry average of over 12 percent.

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