GOCCs can still tap int’l debt markets for funds – DOF

The Department of Finance (DOF) said plans to scrap government guarantees will not hamper plans of government owned and controlled corporations (GOCCs) to tap the international debt markets and borrow funds for their financing requirements.

"The GOCCS will not be in danger if and when the guarantees are removed. We still have to determine the proper time period for them to do the borrowings on their own," said Finance Secretary Margarito Teves.

The DOF is calling for the abolition of automatic government guarantees that GOCCs currently enjoy under their charter and which mandates them to apply for guarantees to the finance department.

These guarantees which are part of contingent liabilities however, while facilitating the approval of loans for GOCCs, have increased the financial burden of the government which is now encouraging these government corporations to borrow independently.

Currently, government’s contingent liabilities that include the guaranteed debts of the National Power Corp. (Napocor) and independent power producers, is estimated at P1.7 billion.

Teves said that the DOF is now reviewing GOCC books and might make recommendations to improve their financial condition and enhance their credit worthiness.

He said the DOF will be selective in canceling guarantee provisions.

"It will have to be on a case-to-case basis. We can also be location/corporation specific and implement a timeframe when to remove guarantees."

Teves noted that the DOF office is also evaluating an audit system for GOCCs, GFIs and social security institutions to assess their finances.

"Maybe by implementing performance contracts we can have more familiarity on how they operate what kind of time period will be necessary for them to be on their own," Teves said.

Moreover, the DOF is reviewing the charter of each corporation with provisions for automatic National Government guarantees.

The DOF believes that government guarantees should be confined to those that actually have the capability to pay back debts sans the comforts of guarantees.

Parallel to DOF’s thrust, the Department of Budget and Management is currently conducting an inventory of GOCCs as part of government streamlining efforts.

Currently, the DOF, DBM, Civil Service Commission and the Commission on Audits are directly involved or indirectly oversee the management of these GOCCs.

To date, government has been successful in streamlining selected GOCCs such as the Napocor, National Development Co., Small Business Group Financing Corp., Philippine Ports Authority and the National Electrification Administration.

The DBM overhaul is part of the administration’s thrust to plug bureaucratic loopholes.

Including subsidiaries, there are 27 state-owned corporations. GOCCs are corporations created or established by a special charter or law.

GOCCs that need to be streamlined further are NFA, Local Water Utilities Administration, Philippine National Railways and Light Rail Transit Authority. These units are directly under the Government Corporate Monitoring and Coordinating Committee, which have the primary responsibility to monitor, coordinate, and conduct performance evaluation of all GOCCs.