Department of Finance (DOF) officer-in-charge Juanita Amatong said the PSRL which still needs to be firmed up could incorporate the remaining $400-million BSRL which government will forfeit when the WB-funded loan lapses this June.
Amatong said this time, government will only commit administrative reforms to the WB, unlike in the BSRL where it committed legislative reforms, most of which never materialized.
Because of government’s failure to comply with rigid conditions of the BSRL, including the full privatization and rehabilitation of the Philippine National Bank (PNB) and legislating the anti-money laundering bill, the WB and the Japan Bank for International Cooperation (JBIC) which co-financed the $600-million BSRL, would not release the second and third tranches of the loan. WB and JBIC already disbursed $200 million in 1999.
"This time, we can only commit what is doable, and what government intends to do is not to give in to conditionalities that cannot be achieved in the medium-term. We will limit our commitments to reforms that do not need legislation," Amatong said.
Amatong added legislative reforms are difficult to commit to creditors because the executive branch cannot impose these on Congress.
"It is something outside of our control," Amatong said.
The WB and JBIC initially wanted banking reforms such as the amendment of the General Banking Act, strengthening the charter of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) and the privatization of PNB.
Later, the creditors also wanted the government to commit the legislation of an anti-money laundering bill now pending in Congress. The reform measure is also needed to remove the Philippines from the list of world’s money-laundering havens.
On the other hand, the full privatization and rehabilitation of PNB has been stalled several times, especially now that government junked its plan for a joint sale of its remaining stake in the bank with majority owner, tycoon Lucio Tan.
Instead, government wants to regain control of the bank through a "reverse privatization" that will have government raising its stake in PNB through a debt to equity scheme.