Arising mostly from sovereign guarantees granted to big-ticket projects that need funding, the contingent liabilities have been the cause of concern among economic planners until the Arroyo administration began tightening up on giving away guarantees that ultimately bloat the fiscal deficit.
According to the Bangko Sentral ng Pilipinas (BSP), the amount of domestic loans guaranteed directly by the National Government (NG) ballooned by 86.1 percent in December from only P12.451 billion in 2000 to P23.167 billion in 2001. On a month-on-month basis, however, this was an 11.7 percent decline.
On the other hand, direct NG guarantees on foreign loans inched up by 0.6 percent from P469.647 billion in 2000 to P472.61 billion in December 2001. Government also assumed 16 percent less guarantees on foreign loans from government financial institutions (GFIs).
Overall, foreign loan guarantees by the National Government represented the bulk of all contingent liabilities, accounting for over 95 percent of the total and 16 percent of total national debt.
Including contingent liabilities, this brought the total NG outstanding debt to P2.880 trillion although the actual NG outstanding debt net of contingent liabilities was recorded at P2.384 trillion.
In 2001 alone, government had to spit out P3.43 billion to pay for the debts of the Metro Rail group because it extended a sovereign guarantee on its loans. If the company doesn’t realize profits this year and misses its debt servicing commitments, government would have to cough up more money to pay for its debts.
Sources said about two thirds of the existing contingent liabilities represented guarantees to the National Power Corp. that would have to be absorbed by the government when the company is finally privatized.
Aside from Napocor and Metro Rail, the other project that has been making the government nervous is the Skyway Development Project, the elevated highway running across the length of the South Luzon Expressway from Buendia Avenue in Makati to Alabang.
Operated by the Indonesian firm, PT Citra, the project has incurred massive debts but the operator has been having hard time trying to get an adjustment in its toll rates as government keeps caving in to public pressure opposing the rate increase. – Des Ferriols