The government plans to add sweeteners to make the debt paper it will sell to raise more funds for the reconstruction of war-torn Marawi City more palatable when rehabilitation moves to its second stage, the Department of Finance (DOF) said Thursday.
In a statement, Finance Secretary Carlos G. Dominguez III said the Marawi bond issuance would happen when the Bangon Marawi Comprehensive Rehabilitation and Recovery Program (BMCRRP) would start requiring more cash for large-scale infrastructure projects.
The Bureau of the Treasury was already preparing to auction off Marawi bonds, with the DOF quoting National Treasurer Rosalia V. de Leon as saying that “the government has been exploring several structures and features to make [the IOUs] appealing to both institutional investors and retail bond buyers.”
As a possible sweetener, the government is considering allowing these bonds a form of compliance by banks to Republic Act No. 10000 or the Agri-Agra Reform Credit Law.
RA 10000 requires banks to earmark 10 percent of their loan portfolio for agrarian reform and another 15 percent for agriculture.
However, lenders’ compliance languished below those compliance rates.
The DOF noted that Marawi bonds could let banks comply, as RA 10000 provided that lenders would pour some of their investible funds into the government’s priority programs.
De Leon said the Treasury was already seeking approvals to allow Marawi bonds as an alternative Agri-Agra law compliance.
In the meantime, “the government would have to calibrate the amount of Marawi bonds that would be issued based on the financing requirements needed for the implementation of the rehabilitation program,” De Leon said.
At present, rehabilitation and reconstruction works in Marawi City—flattened by five months of fighting between government forces and Islamic State supporters in 2017—were still being financed by the government budget.
“The ongoing clearing operations in Marawi as well as the provision for housing and basic services such as water to its residents are currently being funded by allocations in the national budget, which are currently sufficient to fulfill such requirements,” Dominguez said.
“When we start getting into the bigger expenditures, then we will be issuing the Marawi bonds,” he said.