Funding agencies withhold loans for RP

Finance Secretary Jose T. Pardo said yesterday that anywhere from $800 million up to $1.4 billion in loans have been withheld by various multilateral financial institutions due to the government's failure to pass key legislation on the power sector reform program and to implement the full privatization of the Philippine National Bank (PNB).

Pardo admitted that the loans from the International Monetary Fund (IMF), the Asian Development Bank (ADB) and the World Bank (WB) are being withheld pending the passage of an energy/power sector reform bill and the privatization of PNB.

Finance Undersecretary Joel Banares said the ADB has withheld the second tranche amounting to $100 million of a power sector reform loan, which in turn has delayed the release of a co-financing worth $100 million from the Japan Bank for International Cooperations (JBIC).

The delay in the passage of the power sector bill has also delayed the release of another ADB loan amounting to between $500 million to $600 million for the Leyte-Mindanao interconnection project, Banares added.

Also affected by the delay in the passage of the power bill is the release of the remaining tranche of the country's current standby program with the IMF amounting to $400 million.

The WB, Banares continued, is also withholding the release of the second tranche of the Bank Sector Reform Loan (BSRL). This tranche amounts to $100 million and carries a cofinancing of $100 million from the JBIC.

Pardo said the government is trying to work out the passage of the power bill as well as complete the privatization of PNB by March.

As for PNB's privatization, Pardo said the government is trying to convince taipan Lucio Tan to pool his shares in PNB with that of the government to attract better offers from interested buyers.

Unfortunately, Pardo admitted, Tan has remained non-committal. "Ngumi-ngiti lang siya (he just smiles)," Pardo said.

Another option, Pardo said, "is just to go ahead and auction the government's remaining 30 percent stake in PNB.