Government to securitize P200 B in idle assets to reduce deficit

The Arroyo administration plans to convert an estimated P200-billion worth of non-performing assets (NPAs) into securities to help reduce government’s budget deficit and achieve a balanced budget by 2004 or 2006.

Finance Secretary Alberto Romulo said the Development Budget and Coordinating Council (DBCC) is coordinating with government’s financial advisors, JP Morgan and Morgan Stanley to come up with specific measures on how to liquidate or dispose of the NPAs.

The DBCC is composed of representatives from the Department of Finance, Bangko Sentral ng Pilipinas, Department of Budget and Management and the National Economic and Development Authority.

"We hope to be able to trim the budget deficit as well as pay other obligations if we could securitize these non-performing assets," Romulo said.

He said the financial advisors which also include a local bank and a foreign investment bank," could include the issuance of bonds and debt swaps which were resorted to before and other similar mechanisms."

Romulo said that initial estimates show that about five percent of total NPAs or about P8 to P10 billion, could be converted or securitized into marketable instruments.

The finance chief did not identify specific assets, but said these will include all idle government assets.

He said the DBCC is also considering tapping for this purpose, government’s accounts payables of about P70 billion left by deposed President Joseph Estrada, could be securitized and sold at a discount.