WB won’t refinance RP debts

The World Bank (WB) is not keen on providing refinancing loans to the Philippines, a ranking WB official said.

"We can’t refinance debts," WB country director Joachim von Amsberg said.

But Amsberg said they would be willing to provide more program and project loans to the country.

"If we provide financing in a larger scale with long maturities and lower interest rates, the net effect would still be lower cost and replace borrowing from the market and could lead to an improvement in (the country’s) debt stock," the bank official said.

Amsberg noted that multilateral financing from the WB and Asian Development Bank (ADB) and similar agencies is at a cost that is substantially below the cost of market borrowing.

"So if today the government goes out to the market and issues a bond they pay nine to 10 percent on dollar borrowings. From us, they pay only three to four percent," he said.

He said "the difference is a net savings for the Philippines and the government has recognized that and therefore has indicated that they wanted to make a larger use of financing its expenditures."

Finance Secretary Margarito Teves earlier said a team from multilateral creditors will visit Manila on November to discuss the proposed new refinancing window for the Philippines which will carry lower interest rates.

Teves said the savings that would be generated from this possible arrangement with the International Monetary Fund (IMF) and the World Bank could be used for infrastructure and social services.

The finance chief said they would try to "stretch" or reduce the interest rate if possible under this proposed refinancing facility.

But Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. has a different point of view. "IMF follows the principle of revolving resources. I do not know how this arrangement would be done," Tetangco said.

The BSP chief noted that the IMF’s main purpose is to lend through balance of payments (BOP) financing which usually are medium-term loans with a five-year maturity.

The WB, on the other hand, has the so-called International Development Association which could be tapped for this purpose.