BANGKO Sentral ng Pilipinas Deputy Governor Nestor Espenilla Jr. said the domestic capital market could take an active role in funding the government’s large-scale infrastructure projects.
Espenilla, in a speech during the 20th anniversary of the Fund Managers Association of the Philippine held recently at the Peninsula Manila in Makati City, said funding the big-ticket infrastructure projects could not solely be provided by the banking system.
“A deep and vibrant domestic capital market is a necessary complement to bank financing. We understand that the use of project bonds has been gaining ground in providing funds to special purpose entities. These present good investment opportunities for long-term investors,” Espenilla said.
He said Bangko Sentral had been keeping an eye on the increasing appetite of both the public and the private sectors to participate in large-scale infrastructure projects.
He said in response, the Bankgo Sentral rationalized some lending restrictions to support the financing of priority productive sectors and projects under the Philippine Development Plan, the or Public Investment Program.
“In particular, the BSP now allows companies the flexibility to engage in different Public-Private Partnerships or PPPs structured as special purpose entities or SPEs. Each of these SPEs is treated as an independent entity with its own single borrower’s limit as long as the project cash flows are properly ring fenced,” he said.
He said Bangko Sentral as financial regulator had been actively supporting the development of the domestic capital market, providing additional means for the much-needed financing of a growing domestic economy. Julito G. Rada
Some recent initiatives include the issuance of risk management guidelines on investment activities, establishment of efficient payment systems, promoting project finance and reforms in the trust business. Julito G. Rada