Announcement of Philippines Reorganizes Government Corporations on June 17, 1988

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 88/89 Contact: Richard Kollodge (202) 477-4507 PHILIPPINES REORGANIZES GOVERNMENT CORPORATIONS WASHINGTON, June 17, 1988 -- An ongoing program to reorganize and privatize Philippine government corporations is being supported by a $200 million loan from the World Bank. The program will provide the foundation for a phased structural adjustment of the country's public corporate sector by establishing a policy and institutional framework to reduce and rationalize the activities of all government corporations. Under the program, the government corporate sector will be substantially reduced, mainly by privatization or abolition of government corporations. The efficiency and effectiveness of corporations being retained in the public sector will be improved by setting up planning and performance evaluation systems. Most of these corporations provide basic services, including electricity, water, irrigation and low-income housing. The government will also continue privatization efforts, including the sale of stock to managers and employees and debt-to-equity swaps. The changes are expected to result in government savings, better services to the public, and more efficient operations in public corporations. Also, public share issues from the sale of government corporations will contribute to the development of domestic capital markets. The World Bank loan is for 20 years, including five years of grace, with a variable interest rate, currently 7.72 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. Note: Money figures are in U.S. dollar equivalents.