Angara moves to scrap automatic guarantees on loans contracted by GOCCs

Senator Edgardo J. Angara moved for the scrapping of the automatic guarantees given by government to loans contracted by government owned and controlled corporations to prevent them from pursuing "worthless and controversial projects" that would only burden Filipinos with additional debt.

Angara said that the automatic guarantees given by the national government to the loans of the GOCCs only embolden the state corporations to pile up debt after debt in pursuit of worthless and irrelevant projects.

"Payment is assured with the automatic guarantee from the national government. Under this scenario, foreign institutions are willing the bankroll even projects that are not sound and viable," said Angara, who chairs the senate committee on banks, currency and financial institutions.

Angara said that fiscal prudence and discretion will be the direct result of the scrapping of the automatic guarantees.

Angara said that it is both "sad and ironic" that the most controversial projects of the GOCCs are funded by loans with automatic guarantees.

Angara said that the National Food Authority is at the top of the list of several public corporations that have contracted loans that they cannot repay.

The scrapping of the automatic guarantees on loans contracted by the public corporations is the centerpiece of a bold fiscal reform that Angara has vowed to carry out.

Angara said that scores of private corporations have been getting undeserved tax credits and tax breaks from government . This, he said, should stop.

Angara said that only deserving and pioneering corporations should get tax breaks from the government's revenue agencies.

Once plugged, the reckless grant of tax credits and breaks would result in at least P250 million a year in additional revenue collection.

Angara said that a thorough review of the tax incentives from government is in order to determined the entities that truly deserve these.

On the government corporations that profit heavily because of their gambling and related operations, Angara said these profitable corporations should carry out a huge social payback.

"These corporations should support education programs and other vital social expenditures," said Angara.

For the private sector, Angara is also working to establish a credit information bureau that will help guide the banks in their lending operations.

Once full integrity is in place in the banking sector, the release of loans would be fast-tracked and the cost of interest charges will go down, he said.