NG to raise P20 B to pump-prime economy in 2001

Government hopes to raise another P20 billion next year by selling anew the so-called Economic Recovery Agricultural Productivity (ERAP) bonds to help pump-prime the economy through the agriculture sector, Finance Secretary Jose T. Pardo said yesterday.

Pardo and Agriculture Secretary had discussed plans to create one million additional jobs in the agriculture sector starting next year.

The P20 billion is part of the P50 billion approved issuance of ERAP bonds of which only P5 billion was sold in 1999.

The planned P20 billion ERAP bonds will have a maturity of between seven to 10 years. The initial P5-billion offering which carried a yield of eight percent per annum has a maturity period of five to seven years.

Proceeds of the initial ERAP bonds were supposed to be used for on-lending to agricultural projects.

However, there were complaints that the conduit banks have been imposing high rates for the use of the funds.

"There are at least two companies which are set to tap the ERAP bonds proceeds," Pardo said.

They are Lapanday Holdings of the Lorenzo family and the Rustan’s group of companies of the Tantocos.

Lapanday and Rustan’s are reportedly borrowing P300 million from the Land Bank of the Philippines which is one of the conduit banks of the ERAP bonds.

Government will again try to pump-prime the economy next year as growth is expected to slow down to anywhere from three percent to 3.5 percent.

Government is also hoping to pump-prime the economy through the housing sector. However, a key to the government’s financing plan would be to keep interest rates down.