MANILA, Philippines—The Development Bank of the Philippines has secured the central bank’s approval to raise $300 million from a bond sale. DBP officials said proceeds from the sale would be used to fund the government’s infrastructure projects.
According to Diwa Guinigundo, Bangko Sentral ng Pilipinas deputy governor, the central bank has approved in principle the DBP plan to sell bonds in the international capital market. That move, he said, would help jumpstart the government’s Public-Private Partnership (PPP) program.
“The fund-raising activity will support projects under the PPP program,” Guinigundo said, adding that preparations for the bond float are already underway.
The government has tapped HSBC, JP Morgan, Credit Suisse First Boston, and Goldman Sachs as book runners for the bond sale.
According to the government, DBP will use proceeds from the bond sale to lend to private-sector companies that, in turn, will invest in public infrastructure projects under the PPP program.
The PPP program is a key component in the Aquino administration’s development plan for the country. Under the program, the government will bid out contracts for public infrastructure projects to interested private investors.
Last Monday, the President and his economic team unveiled the first five PPP projects up for bidding in the first half of the year.
The five projects, estimated to have a collective value of $1 billion, are the expansion, operation and maintenance of MRT 3; expansion, operation and maintenance of LRT; Daang Hari SLEx Link Road Project; NAIA Expressway Phase 2; and connection of North Luzon Expressway and South Luzon Expressway.
“When these projects are finally completed, businesses in the Philippines will find faster ways to transport goods,” Aquino was quoted as saying during the launch of the projects held last Monday at the head office of DBP.
According to Finance Secretary Cesar Purisima, who is spearheading the PPP program, tapping the private sector is a prudent step given the government’s lack of resources to support all the country’s infrastructure development needs.
Spending for public infrastructure in the Philippines is estimated at less than 3 percent of the country’s gross domestic product. This pales in comparison to the 5 percent average in the region.