Debt prepayment won't hurt financing for infra, Neri insists

By Rommer M. Balaba

Reporter

THE government’s decision to retire some of its debt would not affect expenditures on infrastructure and services inasmuch as the Bureau of Treasury’s latest move means the country is longer “finance-starved,” Socioeconomic Planning Secretary Romulo L. Neri said on Monday. “It means we now have many funding options available with a lot of dollars coming in,” Neri added. Treasury officials early this month reported the planned purchase of $126 million in Brady bonds ahead of maturity on May 1, which represents final payment on a 1992 debt restructuring program. The purchase would mean net savings of $12.6 million and the freeing up of collateral worth $82.3 million in the form of US treasury bonds. “We will have no problem on expenditures since what it [Treasury] intends to do is pure treasury play and has nothing to do with revenues. In fact I would encourage them, even the Bangko Sentral ng Pilipinas to do it,” Neri said. Neri commented the government could tap on the high savings rate of Filipinos to finance productive activities. Government data put the savings –to-GDP (gross domestic product) ratio last year at 30.3 percent, which roughly is the average for the East Asian region. “It is a matter of spending [funds] on productive capacities… It is just a matter of having the right investment climate,” Neri said, to stimulate these savings to be poured into investments. And creating a conducive investment climate means working out on soft and hard reforms, which means clearing out risks of regulatory capture and putting the needed infrastructure, respectively, he added.

 

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