Solons Back Funding for PAL Rehabilitation

Malaya

Monday, December 21, 1998

The House of Representatives will actively support the proposal of Finance Secretary Edgardo Espiritu to allocate $150 million of the $2-billion Miyazawa loan that the government is hoping to draw to bail out the Philippine Airlines.

Deputy house speaker Eduardo Gullas said yesterday permanent closure of the country’s flag carrier would “shatter investor confidence in the country and ruin the economy.”

He however cautioned government agencies and entities from the private sector who are keen on partaking of the soft loan from the Japanese government that only the legislative branch is vested with the power of appropriations and that assurances from sources other than Congress itself  “do not hold water.”

“PAL must be saved but Congress should be the one to make the appropriations of the more out of the Miyazawa Fund,” Gullas said.

PAL’s rehabilitation plan calls for the infusion of $150 million in new equity; the dilution of holdings of Lucio Tan, the airline’s majority stockholder, to give way to the transfer of control to the new management; and to reschedule its $2.28-billion loans by the least three years.

The loan package is part of the $30-billion fund aid initiative unveiled last October by Japanese Finance Minister Kiichi Miyazawa for picked Asian economies severely hit by the currency crunch.

The package consists of $15 billion in short-term “stimulative” funds and another $15 billion in long-term aid.

Gullas noted that the portion of the Japanese loan arrangement requires the government to put counterpart funding which makes Congress supervision of the fund allocations more compelling.

The solon reported that so far, the Economic Mobilization Group has already identified seventeen rehabilitation projects worth $5.8 billion which will be added to the Philippine Chamber of Commerce and Industry’s own “priority list,” which will be presented by the Philippine government’s finance officials to the Japan Export and Import Bank (Jexim) and the Overseas Economic  Cooperation Funds(OECF) for approval. (Peter Tabingo)