Senator Alan Peter Cayetano raised alarm over the use of “sovereign guarantee” for the government’s housing projects which was earlier approved by President Ferdinand Marcos Jr., specifically as a funding mechanism for the Pambansang Pabahay para sa Pilipino Housing (4PH) program.
A sovereign guarantee is a government promise to cover the repayment of a loan if a borrower fails to do so.
With the President’s approval, the government will back the financial obligations of the 4PH program, potentially helping secure funding from international or private sources by reducing the risk for lenders.
Cayetano recalled past issues where developers, supported by guarantees from government institutions, encountered financial difficulties when borrowers defaulted.
This led to significant financial risks for these institutions.
“This is my fear. It was our problem before when developers would borrow funds from GSIS, PAGIBIG, et cetera, and SSS would guarantee and then they would let the buyers borrow also,” he said.
Cayetano called on the Development Budget Coordination Committee (DBCC) to thoroughly assess the funding mechanisms for housing projects due to concerns about using a sovereign guarantee for this initiative.
He also urged the DBCC to carefully review the funding to ensure it is practical and effective.
“We all want quality housing. We all want to fix that. But economics has to work,” he noted.
He noted that if Department of Human Settlements and Urban Development (DHSUD) Secretary Jose Rizalino Acuzar is confident about providing homes for the homeless through this program, it is essential that the plan is carefully designed and feasible.
He pointed out the need for housing projects to be financially realistic and be based on more than just ‘hopeful promises.’
