NEWSFLASH

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GOVT REJECTS $300-M WORLD BANK LOAN

Manila, May 10, 1998 - The Philippine government has decided to turn down a $300-million loan from the World Bank due to disputes over the lifting of the bank secrecy law, a precondition sought by the WB for the granting of the loan.

Bangko Sentral ng Pilipinas Governor Gabriel Singson said his office is no longer interested in the loans because he is not ready to endorse some WB proposals, particularly the lifting of the bank secrecy law which prohibits banks from disclosing information about depositors.

Finance Secretary Salvador Enriquez agreed, saying the lifting of the bank secrecy law "may not be in harmony with our financial sector liberalization."

The World Bank is hoping that the new administration would be more open to the proposal, and has deferred processing of the loan until after the May 11 elections.

A World Bank official said the bank may not extend the loan if the government refused to implement some of the reforms, particularly the lifting of the secrecy law.

"The World Bank sees it as a major banking sector reform. If the government will not implement it, then the loan may not be extended," the official said.

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