BSP okays $257.5-M BNP Paribas loan

The Bangko Sentral ng Pilipinas (BSP) has approved $257.5-million worth of loans from BNP Paribas that would partly finance the construction of rural bridges.

The BSP last week approved the loans that would be used to bankroll part of the President’s Bridge Program under the Rural and Urban Development Program of the Department of Public Works and Highways.

The BSP said over the weekend that the yen-denominated loans were equivalent to a total of Y27.538 billion or about $257.403 million; consisting of Y23.407 billion worth of buyers’ credit and Y4.130 billion worth of commercial loans from BNP Paribas.

BSP Deputy Governor and officer-in-charge Armando Suratos said the BSP approved the loans under terms that covered the Buyers’ Credit Agreement and Commercial Loan Agreement both dated Sept. 4, 2008.

The project was aimed at linking remote agricultural areas to major thoroughfares to smoothen the flow along the supply chain and address the periodic and supply-related price shocks.

The current project involved the construction, installation and establishment of 10 girder-type flyovers and 72 national bridges along the country’s congested highways and road network.

The bridges, which would principally benefit the rural and urban populations in the super regions, were designed for easy and quick installation using minimum equipment. They could also be transported in regular trucks or standard sea containers.

These so-called Super regions are North Luzon Agribusinesses Quadrangle, Luzon Urban Beltway, Central Philippines, and Mindanao.

Suratos said the loans would carry a 14-year maturity including a grace period of four years.

Suratos said the buyers credit would carry a fixed commercial interest reference rates (CIRRs) of 2.49 per annum.

The CIRR is the official lending rates of Export Credit Agencies. These rates were calculated monthly and were based on government bonds issued in the country’s domestic market for the country’s currency.

The commercial loan, on the other hand, would mature in five years with 1.5 years grace period. This loan would carry an interest rate based on the Japanese yen LIBOR plus 2.4 percent margin per annum. The interest would be reset every six months.

DPWH would be the implementing agency and the national government would be the borrowing entity.

The project would involve the construction, rehabilitation and development of various bridges in selected areas nationwide, forming a significant part of the government’s infrastructure program.

The program, which has spanned the terms of former presidents Fidel Ramos and Joseph Estrada, is being funded out of various loans and official development assistance (ODA) from creditors and donors.

However, the program has been mired in controversy, often attacked by the opposition on suspicion of being pilfered for election campaigns.

The Arroyo administration is trying to move the program as part of its plan to spend an additional P93.6 billion to cushion the impact of soaring inflation.

The government’s plan to increase spending beyond the 2008 budget stemmed from pressures to whip up some kind of support program for low-income families most affected by skyrocketing oil prices.

The plan was to increase infrastructure spending to create jobs and lay down the support structure for sustained rural and urban development.