MOODY'S WARNS VS RISKS TO STABILITY: INADEQUATE RESPONSE TO 'YOLANDA', PORK BARREL ISSUE

The national government’s perceived “inadequate response” to Supertyphoon “Yolanda” and the pork barrel issue may jeopardize the country’s political stability, which has been instrumental in allowing the economy to grow at record rates. International debt watcher Moody’s Investor Service likewise noted that the average income of households in the Philippines, which is one of the lowest among countries rated at “investment grade,” posed a risk to the country’s economic prospects. It also noted that the per capita income in the Philippines was among the lowest for similarly rated countries—second only to India. Government data released this week showed that 25.2 percent of the population lived below the poverty line in 2012 despite the economy growing by 6.8 percent that year. Even with these risks to the country’s growth, Moody’s remained confident that the Philippine economy would continue to expand at its current pace for at least two more years to come.

ALSO: Gokongwei buys 27% of Meralco

JG Summit Holdings Inc., the investment vehicle of tycoon John Gokongwei Jr., is now officially a minority shareholder of power distribution giant Manila Electric Co. (Meralco). In a regulatory filing, JG Summit said it “successfully completed the acquisition of 305.68 million common shares of Meralco from San Miguel Corp., San Miguel Pure Foods Co. Inc. and SMC Global Power Holdings Corp.” The deal was consummated through a special block sale yesterday, allowing diversified conglomerate SMC to substantially pare down its stake in the power distributor that is controlled by the Pangilinan Group. Late in September, the Gokongwei family’s listed holding firm struck a deal to buy a 27-percent stake in Meralco for P72 billion from SMC, which is focusing on various investment opportunities like infrastructure projects and oil and gas acquisitions.

ALSO: Pork still coats budget

LAWMAKERS still have their pork in the 2014 budget, even though the Supreme Court has ruled that the Priority Development Assistance Fund is illegal, former national treasurer Leonor Briones said Wednesday. Briones, the convenor of the group Social Watch Philippines, said the 2014 budget still contains lump-sum allocations that media have described as “presidential pork.” Senator Francis Escudero, chairman of the Senate’s finance committee, said the approved budget was P3.2 billion lower than Malacañang’s original recommendation of P2.268 trillion, which was adopted by the House of Representatives. The P3.2 billion was deducted from the four agencies where the original PDAF allocation of the senators were placed: the Commission on Higher Education, the Department of Health, the Department of Labor and Employment and the Department of Social Welfare and Development. “This net cut represents the foregone pork barrel of a total of 15 senators and the vice president who have decided to heed the clamor of the people to totally renounce their P200 million PDAF allocation in the 2014 General Appropriations Act,” Escudero said. Senate approval of the budget was unanimous. Unlike the Senate, the House of Representatives on Wednesday adjourned without having ratified the 2014 national budget. Speaker Feliciano Belmonte, Jr. said the House will ratify the bicameral conference committee report on the Palace’s proposed P2.268 trillion national budget for 2014 by net week. The session Wednesday was adjourned around 5 p.m. for lack of quorum.


Moody’s warns against risks to stability ‘Inadequate response’ to typhoon, pork barrel issue

DECEMBER 16, 2013 (INQUIRER) By Paolo G. Montecillo - The national government’s perceived “inadequate response” to Supertyphoon “Yolanda” and the pork barrel issue may jeopardize the country’s political stability, which has been instrumental in allowing the economy to grow at record rates.

International debt watcher Moody’s Investor Service likewise noted that the average income of households in the Philippines, which is one of the lowest among countries rated at “investment grade,” posed a risk to the country’s economic prospects.

“The favorable political backdrop that has facilitated the government’s recent track record of policy performance could be threatened by ongoing deliberations related to discretionary spending by politicians or perceptions of an inadequate response to Supertyphoon [Yolanda],” Moody’s said in a report Tuesday.

Moody’s cited reforms implemented by the Aquino administration, which holds control over both houses of Congress since taking office in 2010, that have contributed to the country’s economic boom.

These included an enhanced budgetary discipline through the introduction of zero-based budgeting, the ongoing disaggregation of lump-sum funds and stricter financial oversight of government-owned and controlled corporations (GOCCs).

The rating firm also praised the government’s implementation of the one-year validity for all appropriations.

Moody’s said this enabled the government to outperform its deficit targets over the past two fiscal years.

“There have also been recent gains in strengthening tax compliance and enhancing public procurement processes,” Moody’s said.

These reforms have led to significant improvements in the country’s rank in the World Bank’s Worldwide Governance Indicators scorecard. “Government effectiveness has shown even stronger gains and is now considered better than not just its regional peers India and Indonesia,” the rating firm said.

“The main challenge facing Philippine policymakers is sustaining the positive trajectory of institutional quality through the current political cycle,” Moody’s said.

The rating firm said the administration’s political capital might shrink because of recent criticism over its response to Yolanda and the pork barrel issue, which forced one top administration executive to resign earlier this month.

It also noted that the per capita income in the Philippines was among the lowest for similarly rated countries—second only to India. Government data released this week showed that 25.2 percent of the population lived below the poverty line in 2012 despite the economy growing by 6.8 percent that year.

Even with these risks to the country’s growth, Moody’s remained confident that the Philippine economy would continue to expand at its current pace for at least two more years to come.

FROM PHILSTAR

Gokongwei buys 27% of Meralco By Neil Jerome C. Morales (The Philippine Star) | Updated December 12, 2013 - 12:00am 0 4 googleplus0 4


JOHN GOKONGWEI, JR's JG Summit completes purchase of P72-B Meralco shares held by San Miguel

MANILA, Philippines - JG Summit Holdings Inc., the investment vehicle of tycoon John Gokongwei Jr., is now officially a minority shareholder of power distribution giant Manila Electric Co. (Meralco).

In a regulatory filing, JG Summit said it “successfully completed the acquisition of 305.68 million common shares of Meralco from San Miguel Corp., San Miguel Pure Foods Co. Inc. and SMC Global Power Holdings Corp.”

The deal was consummated through a special block sale yesterday, allowing diversified conglomerate SMC to substantially pare down its stake in the power distributor that is controlled by the Pangilinan Group.

Late in September, the Gokongwei family’s listed holding firm struck a deal to buy a 27-percent stake in Meralco for P72 billion from SMC, which is focusing on various investment opportunities like infrastructure projects and oil and gas acquisitions.

To fund the acquisition, JG Summit raised P8.8 billion through an overnight share sale and P12 billion by unloading a portion of its stake in snack food unit Universal Robina Corp. The company is planning to generate as much as P30 billion from the bond market.

The Meralco acquisition allowed JG Summit to partner anew with the group of businessman Manuel V. Pangilinan. In 2011, telecommunications giant Philippine Long Distance Telephone Co. acquired Sun Cellular operator Digital Telecommunications Philippines Inc. of the Gokongwei family through a P69.2-billion share -swap deal.

JG Summit is also venturing into infrastructure projects as it formed a joint venture firm with Pangilinan-led Metro Pacific Investments Corp. to bid for the expansion and operation of the P17.5-billion Mactan Cebu International Airport project.

In the nine months to September this year, profits of JG Summit slipped 21.8 percent to P8.41 billion from P10.76 billion a year ago due to the depreciation of the peso against the dollar.

For its part, SMC is no longer a significant minority shareholder in Meralco. In October 2008, SMC bought the Government Service Insurance System’s 300.963 million Meralco common shares at P90 apiece.

From its core brewery and food business, SMC has expanded into power production (SMC Global Power Holdings Corp.), downstream oil sector (Petron Corp.), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport and Skyway.

FROM THE MANILA STANDARD

Pork still coats budget By Joyce Pangco Panares | Dec. 12, 2013 at 12:01am 1 Watchdog:

Lump sums get new tag

LAWMAKERS still have their pork in the 2014 budget, even though the Supreme Court has ruled that the Priority Development Assistance Fund is illegal, former national treasurer Leonor Briones said Wednesday.

Briones, the convenor of the group Social Watch Philippines, said the 2014 budget still contains lump-sum allocations that media have described as “presidential pork.”

“The challenge really is for us to remain vigilant because there are still lump sums, which are a form of pork barrel. Examples of these lump sums are the P80 billion unprogrammed fund and the P20 billionrehabilitation fund. As to how these will be spent, this was not detailed,” Briones said in a phone interview.

She said another lump sum is the P2.5 billion in scholarship funds.

“As for lawmakers, there is still pork. They just changed the name. To satisfy the requirement of the Supreme Court declaring the PDAF illegal, now lawmakers go through the motion of suggesting projects to line agencies,” Briones said.

“So lawmakers still exercise influence over projects. The small advantage here is that agencies are audited on an annual basis,” she added.

The congressional bicameral conference committee on Tuesday approved the proposed P2.264-trillion national budget for 2014.

Lawmakers said next year’s budget no longer included the pork barrel of 15 senators and Vice President Jejomar Binay.

Senator Francis Escudero, chairman of the Senate’s finance committee, said the approved budget was P3.2 billion lower than Malacañang’s original recommendation of P2.268 trillion, which was adopted by the House of Representatives.

The P3.2 billion was deducted from the four agencies where the original PDAF allocation of the senators were placed: the Commission on Higher Education, the Department of Health, the Department of Labor and Employment and the Department of Social Welfare and Development.

“This net cut represents the foregone pork barrel of a total of 15 senators and the vice president who have decided to heed the clamor of the people to totally renounce their P200 million PDAF allocation in the 2014 General Appropriations Act,” Escudero said.

Senate approval of the budget was unanimous.

Escudero said no senator opposed his motion to approve and ratify the proposed national budget on the floor.

Unlike the Senate, the House of Representatives on Wednesday adjourned without having ratified the 2014 national budget.

Speaker Feliciano Belmonte, Jr. said the House will ratify the bicameral conference committee report on the Palace’s proposed P2.268 trillion national budget for 2014 by net week.

The session Wednesday was adjourned around 5 p.m. for lack of quorum.

The 2014 budget bill was approved by the bicameral conference committee Tuesday, the quickest in history.

Opposition lawmakers led by Bayan Muna Rep. Neri Colmenares protested the lump-sum allocations under the Office of the President, however.

They included: budgetary support to government-owned-and-controlled corporations at P46.69 billion; school building program, P1 billion; e-government fund, P2.50 billion; Department of Agriculture (Farm to market roads), P12 billion; Department of Education (various items for school buildings), P44.63 billion; various infrastructure including local projects, P11.39 billion; Department of Health (Health Facilities Enhance-ment Program), P13.30 billion; and the Department of Agriculture (Irrigation fund), P5.10 billion.

But Escudero said the proposed appropriations law will require lump sum funds to be subjected to further line-item budgeting. Agencies will also be mandated to submit quarterly reports to be posted on the Budget Department’s website.

The budget includes a P100-billion lump-sum rehabilitation fund for calamity-hit areas.

Congress also created a Quick Response Fund for the Department of Science and Technology and the Department of Health which amounts to P16.9 billion, an increase of about P6 billion from the original proposal.

The budget is on top of the P100-billion fund in the 2014 national budget for the reconstruction of areas recently hit by disasters, particularly super typhoon Yolanda and the earthquake in Bohol. With Macon R. Araneta and Maricel V. Cruz


Chief News Editor: Sol Jose Vanzi

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