Duterte OKs merger of state guarantee firms

MANILA, Philippines — President Rodrigo Duterte has approved the merger of the Home Guaranty Corp. and the Philippine Export-Import Credit Agency to prevent redundancies and lower administrative costs. 

The merger is contained in Executive Order No. 58 signed by Executive Secretary Salvador Medialdea by authority of Duterte last July 23.

The order also transferred the guarantee functions, programs and funds of the Small Business Corp. and the administration of the Agricultural Guarantee Fund Pool and the Industrial Guarantee and Loan Fund to the PhilExim.

The order said the reorganization would help avoid operational redundancies, standardize policies, processes and procedures, facilitate timely approvals and lower administrative costs. 

"A more efficient allocation of government contributions will be achieved with the pooling of all resources provided under the different guarantee mechanisms," the order read. 

A centralized approach would also allow the government to have a more comprehensive oversight of its guarantees to effectively identify, monitor and control risks, implement necessary measures to manage risks and provide appropriate capital against risks, it added. 

To reflect the centralized nature of the merged guarantee functions, the PhiExim shall be renamed as Philippine Guarantee Corporation or PHILGUARANTEE. 

PhilExim, which was created in 1977 to provide guarantees and facilitate the entry of foreign loans for development projects, will be the surviving entity in the merger. All guarantee-related functions, programs, funds, assets and liabilities of SBC will be transferred to PhilExim. 
 
The administration of AGFP and the IGLF will also be moved to PhilExim.

The Finance department will implement the merger and transfer of programs, functions and funds in consultation with the Band Bank of the Philippines, Development Bank of the Philippines, the Agriculture department, the Housing and Urban Development Coordinating Council and the Trade department. 

The authorized capital stock of the PhilExim will be increased to P50 billion from P10 billion. The equity contributions of the national government to the HGC, IGLF and AGFP will be transferred to the PhilExim to form part of its paid-up capital. 

Any balance in the required paid-up capital will be charged as capital infusion from the national government to be sourced from the annual budget.

PhilExim and SBC were ordered to submit their respective restructuring plan to the Governance Commission for Government-Owned and Controlled Corporations within a year.

All state employees to be affected by the merger may avail of separation pay, which will be sourced from the corporate funds of the concerned state-run firms. 

The PhilExim is allowed to establish its own subsidiary corporation to clean up its balance sheet through the spin-off of its non-performing assets and outstanding loans. — Alexis Romero