Finance Secretary Jose Isidro Camacho said some of the big-ticket items up for sale by government are its remaining 10-percent stake in power distributor Manila Electric Co. (Meralco), tollways operator Philippine National Construction Co. (PNCC), broadcast network IBC 13, properties in Moonwalk, Bases Conversion Development Authority and International School. There are also other smaller items programmed for privatization.
Finance officials said that because of the erosion of business confidence last year and this year due to a series of developments like the war in Mindanao, the weak state of the equities market, the juetengate scandal and the Sept. 11 attacks on the US and the subsequent economic fallout of major economies, revenue projections had to be downscaled.
Last year, actual revenues reached only P4 billion against a target of P22 billion as there were not enough serious investors with the financial muscle to bail out the state assets.
Finance sources added next year’s projection of P2 billion excludes the projected P13-billion proceeds from the issuance of bonds by the Philippine Amusement and Gaming Corp. and the sale of a property by the Philippine Estates Authority in a reclamation project in Manila Bay which it hopes to complete this year.
So far, government could not get its privatization program going, thus, it sold just P873 million out of the programmed P4.561 billion. It is also nowhere near the full year target of P10 billion which is also down from the original forecast of P19 billion.
Government is relying on proceeds from privatization to help plug its programmed deficit of P145 billion this year.
A higher deficit is deemed bad for the economy since the government would have to compete with the private sector with domestic funds, thus putting pressures on local interest rates to go up. Higher interest rates, on the other hand, would lead to higher prices of goods and services.