DOF vows to hasten PhilEXIM’s merger

The Department of Finance (DOF) vowed to speed up the consolidation of the Philippine Export-Import Credit Agency (PhiIEXIM) with other staterun guarantee firms in compliance with President Rodrigo R. Duterte’s directive.

Finance Secretary Carlos G. Dominguez III said they are now coordinating with the Department of Agriculture, Housing and Urban Development Coordinating Council (HUDCC) and the Department of Trade and Industry (DTI) for PhilEXIM’s rationalization plan.

Earlier, President Duterte issued Executive Order No. 58 directing the DOF to merge the functions of Home Guaranty Corp. (HGC) and PhilEXIM, along with Small Business Corp. (SBC), Agricultural Guarantee Fund Pool (AGFP) and the Industrial Guarantee and Loan Fund (IGLF).

Once completed, PhilEXIM will be the surviving entity to be called the Philippine Guarantee Corp.

With the consolidation, the PhiIEXIM’s authorized capital stock will rise from 110 billion to 150 billion and the equity contributions of the national government to the HGC, IGLF and AGFP will be transferred to the PhiIEXIM to form part of its paid-up capital.

Any balance in the required paidup capital, subject to the DOF’s prior coordination with the Department of Budget and Management (DBM), will be charged as capital infusion from the national government.

To clean up PhilEXIM’s balance sheet, the DOF will then spin-off the firm’s non-performing assets and outstanding loans, the department said in a statement.

“The President also directed that the firm be authorized to establish its own subsidiary corporation functioning as board of liquidators,” the DOF noted.

Through this, the DOF said PhilEXIM can “manage its non-performing assets, collect its receivables, recover and dispose of its acquired assets, manage and settle its outstanding loans and administer its default contingent accounts.”

According to Duterte, consolidating all state guarantee firms and programs into a single entity is in the “best interest of the State.”

“It will benefit from economies of scale, prevent operational redundancies, standardize policies, processes and procedures for similar guarantee facilities and programs, facilitate timely approvals and lower administrative costs,” the DOF said.

Duterte also said the pooling of resources provided under the different guarantee mechanisms will lead to a more efficient allocation of government contributions.

Under this centralized approach, “the National Government will have a more comprehensive oversight of its guarantees to effectively identify, monitor and control risks, implement necessary measures to manage risks and provide appropriate capital against those risks,” the EO stated.

Dominguez had recommended in July last year the possible merger of PhilEXIM with all other state-run guarantee firms to further promote fiscal discipline.

The PhilEXIM, which is attached to the DOF, provides credit, credit insurance and guarantee facilities primarily to export-oriented industries, including small and medium enterprises (SMEs).

The HGC, an HUDCC attached agency, guarantees the payment of mortgages, loans and other credit facilities arising from financial contracts for residential purposes.

Under the Department of Agriculture’s supervision, the AGFP is intended to mitigate risks involved in agriculture lending and facility credit in the