Hybrid funding eyed for infra projects

The government is looking into hybrid financing or a mix of foreign aid and loans to jump-start the infrastructure projects in the pipeline.

Separately, Budget Secretary Benjamin E. Diokno said on Monday that the government would closely monitor the infrastructure projects to be rolled out this year through geo-tagging in a bid to fast-track implementation.

In a statement, Diokno said that part of the plan to make the six years of the Duterte administration a so-called “golden age of infrastructure” was spending P846.3 billion or 5.3 percent of gross domestic product (GDP) on infrastructure this year alone.
The budget for infrastructure expenditures in 2017 accounted for a fourth of the total and was 13.7-percent biggest than last year’s program.

“The biggest chunk of the infrastructure budget amounting to P347.8 billion [will be distributed] to road networks to be implemented by the Department of Public Works and Highways, Department of Agriculture, Autonomous Region in Muslim Mindanao, local government units, and other agencies. On the other hand, P125.4 billion was granted to the Department of Education for the construction and repair of basic education facilities, primary school buildings, and technical-vocational laboratories,” the Department of Budget and Management said.

In a separately statement issued last Sunday, Finance Secretary Carlos G. Dominguez III said hybrid financing “would enable the government to profitably manage the leveraging” of close to P1 trillion in official development assistance (ODA) and loans that it had secured from Japan and China alone in just six months of the Duterte presidency.”

According to Dominguez, doing so would bring down borrowing costs.

“Our major plan here is to leverage that. That is, to take projects and then use part-ODA and part-multilateral agency loans so that we can actually increase the number of projects that we can do,” the finance chief said.

“Hybrid financing would involve, for instance, a mix of ODA, which provides concessional interest rates of 0.2-0.5 percent, with development funds from the Asian Development Bank (ADB) and the World Bank to execute an infrastructure project. Combining both types of financing sources would thus enable the government to build more big-ticket infrastructure projects,” Dominguez explained.

“That’s like putting a jigsaw puzzle together using ODA from China and matching that with AIIB [Asian Infrastructure Investment Bank] and ADB funds. So we can be creative in those ways,” he added.

https://business.inquirer.net/223808/hybrid-funding-eyed-infra-projects