The Department of Finance (DOF) said it is targeting to raise around P40 billion through the issuance of bonds for the reconstruction and rehabilitation of war-torn Marawi City in Lanao del Sur.
According to the DOF, the government is fine-tuning the funding mix for the budget needed to rehabilitate Marawi City. The city’s rehabilitation may be funded through grants and the issuance of the so-called Marawi bonds.
“Some [portions] of [the budget], I said, will come in terms of grants from outside and also from domestic [sources],” said Finance Secretary Carlos G. Dominguez III.
He said the tenor of the Marawi bonds would depend on market conditions, with the government issuing around P10 billion annually, and raising some P40 billion of the P62-billion rehabilitation cost.
Based on a report by Task Force Bangon Marawi Chairman Eduardo D. del Rosario, the five-year plan for the reconstruction and rehabilitation of Marawi City will require some P62 billion, P10 billion of which has already been appropriated in the General Appropriations Act (GAA) for 2018.
Dominguez added that the DOF is currently assessing the timing for the issuance of the Marawi bonds. He said the government may issue the bonds in several tranches.
“We will issue it definitely in tranches because we should not borrow more than what we need for that year. We already have P10 billion already budgeted so we will go and get more details on how much is actually required and at what dates,” he said.
The DOF chief pointed said the government might issue the Marawi bonds in the form of retail Treasury bonds (RTBs) “so that people will really feel that they are participating in the rebuilding of Marawi City.”
National Treasurer Rosalia V. de Leon told reporters on Monday that the number of tranches, or the tenor, for the issuance of the Marawi bonds would depend on the implementation timeline of the Marawi rehabilitation plan.
“We will only issue once it’s in the budget because we have to have the appropriations for the expenditure. If the implementation will be for four years, then that would be P10 billion per year.
“We are operating on cash-based appropriations, so we’ll have to see in terms of the implementation timeline for the Marawi plan,” de Leon said.
The budget would cover the use of heavy equipment and bankrolling the plan of the government to acquire properties in the area. Japan and China have committed to provide grants to aid in the reconstruction of Marawi City.
“We are also planning on how to proceed with the Marawi bonds, if it’s going to be RTBs, it will really have to be for retail only. So we have to fine-tune the structure for the Marawi bonds, what is retail and what is for the banks,” she added.
In May the Philippines and Japan signed a ¥2-billion grant agreement that would provide the Philippines funds to support ongoing efforts for the reconstruction and rehabilitation of Marawi City in Mindanao.
The agreement was signed by Dominguez on behalf of the Philippines, and Yoshio Wada, chief representative in the Philippines of the Japan International Cooperation Agency (Jica), on behalf of Japan.
In March the DOF also reported that a total of $7.34 billion in loans and grants had already been committed by China to fund the Duterte administration’s “Build, Build, Build” program, as well as for the rehabilitation of Marawi City.
Last year the DOF chief floated the idea of issuing patriotic bonds to help finance the rehabilitation of Marawi City. He ordered the Bureau of the Treasury to study the issuance of the debt securities, adding that the bonds would appeal to citizens who would like to help rebuild the lives of their fellow Filipinos in the war-torn city.