HSBC airs concern over availability of infra funds
The country’s next president will have to ensure both government and the private sector avoid reaching a wall in terms of financing and capacity to build the infrastructure the country sorely needs.
Most of the major infrastructure projects in the government’s pipeline are all urgent, given the need for the country to catch up to neighbors in the region.
Ensuring the government and the private sector continues to have the money needed to pay for these projects, many of which will be under construction at the same time, will be vital to success.
“Absorption capacity to carry forward these projects can be an issue,” HSBC economist Joseph Incalcaterra said in a briefing Wednesday.
Public private partnerships (PPP), wherein private firms pay for the construction of major projects for the chance to earn from fees, are a major part of the Aquino administration’s infrastructure development plan.
At the moment, the government has nearly three dozen infrastructure projects in the pipeline worth $28.5 billion in its list of PPPs.
Due to single borrower limit (SBL) rules set by the Bangko Sentral ng Pilipinas, there is a natural limit to the amount of money banks can lend to private firms.
SBL rules were relaxed for PPP projects were relaxed by the BSP in 2010, but this window will close in 2016.
In 2016, the government plans to spend P766.5 billion on new roads, bridges, airports, and the like. This is roughly the equivalent of 5 percent of gross domestic product (GDP).
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