The Daily Tribune <<< Without Fear or Favor >>>

»HEADLINES

»NATION

Gov’t to borrow $133.5M for infra buildup plan

By Ruben Hortelano

10/06/2008

The government will borrow $133.5 million from the World Bank (WB) and the Japan Bank for International Cooperation (JBIC) to partly fund an infrastructure buildup which it hopes would help shield the country from the effects of the US financial turmoil.

The policy-making Monetary Board of the Bangko Sentral ng Pilipinas (BSP) approved last Friday the government’s plan for a $40 million loan from WB and another $93.5 million loan from JBIC.

BSP Governor Amando Tetangco Jr. told reporters the WB loan will finance the government’s rural power project that seeks to provide electricity to remote villages across the country.

The JBIC loan worth 10 billion yen or $93.5 million is being sought to finance a relending program that has special emphasis on projects with environmental impact, Tetangco said.

The terms for the loans will be below current market rates that is projected to cost a combined value of P6.23 billion.

The WB loan has a 25-year term, an eight-year grace period on an interest rate of only one percent a year.

The WB, however, imposed a 0.25 percent front end fee, a foreign exchange cover of three percent and a guarantee fee of another one percent.

“The effective rate is 1.09 percent net of costs to the Department of Finance so this is concessional,” Tetangco said.

The JBIC loan, on the other hand has a 14-year term plus a six-year grace priced at the six-month yen London interbank offered rate (Libor) index.

The cost of the loan net of government’s guarantee fee of 1 percent and foreign exchange cover of 3 percent was set at 1.88 percent or similarly concessional in nature, Tetangco said.

The government had alloted P200 billion for infrastructure under this year’s budget that included those from the government-owned and-controlled corporations and local governments.

Some of the projects in the infrastructure buildup were mentioned by President Arroyo in her July 2007 State of the Nation Address.

“Key components of our economic investments include key physical infrastructure projects across the nation to build up roads, bridges and ports,” the President said.