The government must ensure the passage of the promised reforms in the capital markets and power sector if it wants to tap the international capital markets again this year.
Finance Undersecretary Joel Banares, who has just returned after successfully conducting a roadshow of the government's recent $1.6 billion Global bond offering, warned that "foreign investors are very concerned about the promised reforms."
"If we don't (pass the reforms), we lose our credibility and it is so hard to go back," Banares said, adding that "if the government loses its credibility by not passing the promised reforms, we might as well cancel the rest (of the offering)."
The government still needs to raise around $700 million in the third quarter of the year to finance its remaining budget requirement this year.
Out of the latest Global bond offering, only $800 million will be used to finance the country's budgetary requirement. The other $800 million is comprised of a $500 million borrowing in behalf of the National Power Corp. (Napocor) and $300 million was in exchange for old Napocor bonds.
The recent Global bond offering was almost adversely affected by the recent controversy in the local stock market.
Banares, however, said the international financial community continued to remain optimistic that the promised reforms in the power sector, specifically the Power Sector Reform Law and the New Securities Act will still be passed by June this year.
The power sector reform will basically ensure the privatization of the Napocor and assure more efficient generation of electricity.
The Securities Reform Act, on the other hand, is intended to give more teeth to the Securities and Exchange Commission in its regulatory functions.
The Power Sector Reform Act and the Securities Act has been delayed for some time, resulting in the delay of the release of some loans attached to these two important reforms.