By Rea Cu, August 5 2018; Business Mirror
Image Credit to Philippine Export-Import Credit Agency
THE Department of Finance (DOF) has committed to speed up the consolidation of the Philippine Export-Import Credit Agency (PhilExim) with other state-run guarantee firms, in compliance with President Duterte’s directive to merge them into a single corporate entity.
The PhilExim provides guarantees to facilitate the entry of foreign loans into the country for development purposes, as stated under Presidential Decree 1080 in 1977.
Finance Secretary Carlos G. Dominguez III said that in compliance with the President’s directive, the DOF, in coordination with the Land Bank of the Philippines (LandBank), Development Bank of the Philippines (DBP), Department of Agriculture (DA), Housing and Urban Development Coordinating Council (HUDCC) and the Department of Trade and Industry (DTI), will implement Executive Order 58.
Under EO 58, the DOF is tasked to carry out the merger of PhilExim and the Home Guaranty Corp. (HGC); the transfer to the PhilExim of the guarantee functions, programs and funds of the Small Business Corp. (SBC); and the transfer to PhilExim of the administration of the Agricultural Guarantee Fund Pool (AGFP) and the Industrial Guarantee and Loan Fund (IGLF).
The consolidated entity will be called the Philippine Guarantee Corporation (PhilGuarantee).
With the consolidation, the PhilExim’s authorized capital stock will be increased from P10 billion to P50 billion and 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, subject to the DOF’s prior coordination with the Department of Budget and Management (DBM), will be charged as capital infusion from the national government to be sourced from the annual General Appropriations Act (GAA).
To clean up PhilExim’s balance sheet through the spinoff of its nonperforming assets and outstanding loans, the President also directed that the firm be authorized to establish its own subsidiary corporation functioning as board of liquidators “to manage its non-performing assets, collect its receivables, recover and dispose of its acquired assets, manage and settle its outstanding loans and administer its default contingent accounts.”
“The merger of the HGC and PhilExim, with the PhilExim as the surviving entity, and the transfer of the guarantee functions, funds and programs of the SBC, and the administration of the AGFP and IGLF to the PhilExim, are in accordance with the goal of ensuring sound macroeconomic policy through fiscal, monetary and trade policies that will work towards stability, inclusivity, competitiveness and resiliency of the economy under the Philippine Development Plan 2017-2022,” the EO said.
The President pointed out that the pooling of resources provided under the different guarantee mechanisms will lead to a more efficient allocation of government contributions.
Under this centralized approach, “the National Government will 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 those risks,” the EO added.
Last year Dominguez had recommended the possible merger of PhilExim with all other state-run guarantee firms to further promote fiscal discipline.
He directed DOF Undersecretaries Antonette C. Tionko, who heads the Corporate Affairs Group; Bayani H. Agabin, who is in charge of legal services; Grace Karen G. Singson, who heads the Privatization and Management Office; and National Treasurer Rosalia V. de Leon to draw up a plan on how to carry out the proposed consolidation or merger.
In July this year, President Duterte approved the merger of PhilExim with other state-run guarantee corporations, particularly the Home Guaranty Corp., with EO 58 being signed on July 23.