MANILA, Philippines - The Aquino administration is studying which financing option would be best for its planned projects under the public-private partnership (PPP) scheme for infrastructure, Finance Secretary Cesar Purisima said.
Multilateral agencies including the World Bank have also committed to provide financing in the form of project loans.
Purisima said there are various options on how the projects would be financed.
“Funding is not going to be a problem,” Purisima said. One option, he reiterated, is the issuance of infrastructure bonds whenever necessary.
He said four government financial institutions have already committed a total of P200 billion to jump-start the PPP initiatives. This, however, would still be subject to the approval of President Aquino III, Purisima said.
He stressed: “We will issue bonds as necessary.”
One possibility is the so-called Philippine Infrastructure Development Fund, which would be created through the Department of Finance (DOF), with the support of Development Bank of the Philippines and three other state-owned institutions — the Government Service Insurance System (GSIS), the Land Bank of the Philippines and the Social Security System.
The P200 billion would complement the P12.5 billion budget allocation being proposed to Congress for 2011.
The initial funding support may entail the purchase of the Philippine Infrastructure Development Fund Bonds or PIDF Bonds to be issued by the National Development Co. (NDC), the investment arm of the government.
The bonds shall be guaranteed by the government and shall have varying tenors ranging from five to 25 years, depending on the amount of financing required.
Proceeds of the bonds would be used to finance land acquisition for right-of-way costs and other pre-development costs as the government’s counterpart to the infrastructure initiatives.
The government held last week a two-day infrastructure conference aimed at generating investor interest in at least 10 projects ready for implementation starting next year.
The Aquino administration, which is facing a widening budget deficit that is projected to hit P325 billion or 3.9 percent of gross domestic product (GDP) this year, hopes that private sector support in infrastructure would help free up funds for other necessary expenses such as public health and education.