Govt raises privatization target for 2009

THE government has raised its programmed privatization revenues for next year after the sale of Philippine National Oil Co.-Exploration Corp. (PNOC-EC) was postponed, the Department of Finance said.

Finance Secretary Margarito Teves said the country expects to generate P20 billion from non-tax revenues next year, or higher than the earlier program of only P15 billion.

The Finance department programmed P30 billion in revenues from privatization this year.

The government has lined-up the PNOC-EC and the 120-hectare Taguig City property of Food Terminal Inc. (FTI) for disposal next year.

The government likewise plans to lease out its property in Fujimi Cho, Chiyoda Ku, in Tokyo next year. It was supposed to be let out this year, but poor market conditions and some procedural concerns over the lease of the 4,360-square meter land delayed the plan.

The Fujimi property is the official residence of the Philippine ambassador.

Of the three state assets, Teves said the country expects to raise P10 billion from the sale of FTI, which is lower than the earlier assumption of P15 billion.

State-run Government Service Insurance System (GSIS) had expressed interest in FTI, offering P7 billion.

Teves did not provide any valuation for the Fujimi property and PNOC-EC.

“Well it’s conservatively put at P10 billion for FTI. But we don’t know. Those numbers can change. I guess it’s best to be conservative about it,” he told reporters.

The sale and lease of some government’s assets are part of its efforts to improve the country’s fiscal position and boost its coffers.

Amid volatile financial markets this year the government pushed back its plan to sell the state’s stake in PNOC-EC.

“We’ll get a financial advisor. There was a financial advisor that they had but conditions had changed and you know we will have to take a look again by the time we propose to sell it. October this year might be different from March next year,” Teves said referring to the exploration firm’s sale.

In January, the government raised P8.9 billion from the sale of shares in Manila Electric Co. to GSIS, which later sold the same to San Miguel Corp.

Earlier this month, the government ended its 35-year oil refining business, after a British firm agreed to buy out the state’s remaining stake in Petron Corp.

Ashmore Group has agreed to buy the state’s 40-percent interest, equivalent to 3.75 billion shares, for P25.7 billion at P6.86 per share.

No changes for offshore borrowing plan

Given a higher revenue target from the sale of state assets, the Finance department sees no need for revi­siting the country’s external borro­wing program for next year despite the projected wider fiscal gap.

Teves said the government is keeping its $2.6 billion, or roughly P123.4-billion foreign commercial borrowing program for next year even though its budget deficit would likely balloon to P102 billion from the earlier assumption of P43 billion.

But the Finance official didn’t rule out amending the amount to be sourced from foreign lenders in line with the P102-billion budget gap scenario.

The Finance department earlier raised the country’s borrowings for next year by 17 percent to P509.9 billion from the P437.1-billion projected in September this year.

Of the projected amount, local lender would account for 76 percent at P386.5 billion, while offshore lenders—both official development assistance and commercial sources—would stand at P123.4 billion, or 24 percent.

“The $2.6 billion for the external remains the same, while the balance will go to domestic [sources],” Teves told reporters.

The government would tap multilateral agencies like the Asian Development Bank and the World Bank for the foreign component of its borrowing plan, while the domestic borrowings would be raised through auctions of Treasury bills and bonds.

According to the Development and Budget Coordinating Committee, the government would use P384.8 billion to settle the country’s local and international debt, and another P125.1 billion to plug the anticipated budget deficit.

Teves had said the government is prepared to end with a P102-billion budget deficit next year, or way above the programmed ceiling of P43 billion. The emerging 2009 figure is equivalent to 1.2 percent of the economy, as measured by the country’s gross domestic product. –Chino S. Leyco, Reporter, Manila Times