COA report says HGC deficit now at P12.7 billion

MANILA, Philippines - The Home Guarantee Corp. (HGC), a state-owned firm tasked by law to operate a credit guaranty program for government housing programs, has been losing money since 2002 with an accumulated deficit of P12.771 billion.

In a 2011 report released recently, the Commission on Audit (COA) said the agency’s financial status “continues to cast doubt on its ability to provide a viable shelter program for the homeless.”

State auditors headed by supervising auditor Teodora Lacerna said the HGC has been operating on a deficit since 2002 when it started to float zero coupon bonds.

 “HGC has been continuously incurring losses since 2002, the year when it first floated the zero-coupon bonds. From 2002 to 2011, (HGC) has been adversely affected by the financial charges that bond floatations entailed,” the COA report revealed noting that of the P22 billion zero-bond floated by HGC, it only netted P12.136 billion.

The audit team noted that apart from an accumulated deficit of P12.771 billion, the agency has been operating on a negative working capital since 2004 with current liabilities of P6.102 billion almost twice its current assets of P3.172 billion as of Dec. 31, 2011.

Because of the losses that started in 2002, HGC’s net worth went down to just P2.953 billion in 2010 and while its net worth subsequently went up to P4.605 billion, the same was because of a donated capital from the Urban Bliss projects.

The COA said it is doubtful that HGC will be able to perform its mandate since its total guarantees has amounted to P78.339 billion or 20 times more its net worth of just over P4 billion.

Records show that the HGC has unpaid guaranty obligations at P3.484 billion while outstanding debenture bonds totaled P1.908 billion, P1.307 billion of which will mature in 2012.