Filtered By: Money
Money

Merrill Lynch: Privatization to yield P35B


Investment bank Merrill Lynch sees the Philippines raising P35 billion in non-tax revenues this year from the privatization of big ticket items including its interests in utility giant Manila Electric Co. (Meralco) of the Lopez clan. “With the Meralco operation in the pipeline, we forecast total privatization revenue hovering at around P35 billion this year," the investment bank said in its emerging markets report dated March 19. Finance Secretary Margarito Teves earlier urged state-run pension fund managers and government financial institutions to sell the government’s shareholdings in Meralco as one block to make it more attractive to prospective bidders. The government through the Privatization and Management Office (PMO) together with the Social Security System (SSS), the Government Service Insurance System (GSIS) and Land Bank of the Philippines (Landbank) has a 29-percent stake in Meralco. PMO owns 212.12 million shares in representing 12.03 percent of the total capital stock of the utility firm while pension fund managers as well as government financial institutions share the remaining 17 percent. The Lopez family through First Philippines Holdings Corp. (FPHC) is the single biggest shareholder in Meralco with 14 percent while Spanish utility giant Union Fenosa owns nine percent. This early, the Lopez group and the Spanish firm have expressed interest in raising their respective interests in the country’s largest power distributor once the government divests its shareholdings in Meralco. So far, the government has raised P25.2 billion from the sale of its 46 percent interest in Philippine Telecommunications Investment Corp. (PTIC) to Hong Kong-based conglomerate First Pacific Co. Ltd. The stake is equivalent to a 6.4 percent interest in Philippine Long Distance Telephone Co. (PLDT). This helped trim the budget deficit to P18.6 billion in the first two months of the year from P40.4 billion in the same period last year. Revenues rose 18.5 percent to P162.3 billion from P136.9 billion while expenditures inched up only by two percent to P180.9 billion from P177.3 billion. The government hopes to narrow the budget shortfall to P63 billion this year from P64.8 billion last year. Last year’s budget gap was the lowest in eight years or since 1999 when the shortfall reached P111.66 billion. “With privatization coming to the rescue, the authorities are well on track to meet their annual deficit target," Merrill Lynch said. However, Merrill Lynch yesterday warned that the achievement of a balanced budget by next year might be in peril due to the government’s dismal tax revenue performance and lack in spending on much needed infrastructure. It added that balancing the budget by 2008 may not be achievable if the revenue collection performance of the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) does not recover. The tax take of the BIR fell by P200 million to P91 billion while that of the BOC was reduced by P400 million to P25.2 billion. - GMANews.TV

LOADING CONTENT