Miyazawa Money for PAL

People’s Journal

Tuesday, December 15, 1998

Tess Bedico

The task force on the rehabilitation of Philippine Airlines (PAL) is considering obtaining loans from the Miyazawa Initiative to keep Philippine Airlines aloft if all negotiations with strategic partner fail.

Finance Secretary Edgardo Espiritu said the possibility of restructuring PAL as among the programs to be financed by the Japanese-initiated loan program is another option being considered even as negotiations with other prospective partners are being pursued.

The Miyazawa Initiative is a $30-billion aid package for six developing countries, including the Philippines which would be getting $6 billion.

“We are looking at the $150-million requirement for PAL to become viable so we will go up to $150 million," Espiritu said.

He said this is allowed under the support for corporate debt restructuring portion of the initiative and was already done in other Asian countries like Thailand and Indonesia.

He said the task force on PAL’s rehabilitation composed of the management of the airline and the Securities and Exchange Commission would have to formally endorse the plan and negotiate the terms to the Japanese government.

He said the task force on PAL’s rehabilitation composed of the management of the airline and the Securities and Exchange Commission would have to formally endorse the plan and negotiate the terms to the Japanese government.

The Department of Finance chief said the Miyazawa Initiative is being considered since the government does not foresee any progress in the negotiations with the Hong Kong-based Cathay Pacific.

“As of now, we’ve not heard about the latest development. So we are looking at this option because the President does not want to close PAL,” he said.

But Espiritu assured that other possible options are being considered, such as seeking other partners.

Next on the agenda, he said, is to negotiate with In­ternational Finance Corp., a subsidiary of the World Bank, which also expressed its interest to bailout PAL.

He denied earlier reports there were also negotiations with Singapore Airlines.

Espiritu said the concerted effort to save PAL was focused on finding a strategic partner as the President preferred.

Mr. Estrada had promised to do his best to keep the flag carrier in operation not only for the benefit of thousands of its employees but also the flying public and the economy in general.

But he ruled out any government subsidy to prop up the cash-strapped airline, saying the much-needed public money should be judiciously spent on pro-poor and public welfare programs of his administration.