PHILIPPINES HOPES TO TACKLE FOREIGN DEBT PROBLEM
Amid mounting political pressure at home to repudiate part of its $29 billion debt, the Philippine government hopes to finalize a restructuring of its international debt soon.Finance Secretary Jesus Estanislao predicted that early next year his country would finalize a plan to convert into long-term bonds or reduce the interest rate on $5.3 billion of its debt. The Philippines also might redeem up to $2 billion of its borrowings with an eye to raising fresh funds in the future, he said. The restructuring would come in the run-up to a national election next May in which debt is expected to become a major issue. Hoping to revitalize the country's creditworthiness, President Corazon Aquino, who says she will not seek reelection, has resisted mounting calls to suspend debt payments or repudiate some obligations. At the annual meeting of the International Monetary Fund (IMF) and the World Bank here, Mr. Estanislao also said the two institutions have accepted a plan to resume lending to the Philippines' cash-strapped electricity monopoly, in what was seen as a critical test for the government. The IMF had refused to release $50 million in credit until Manila raised electricity charges to cover sharply higher costs stemming from Iraq's invasion of Kuwait last year. Previously, the World Bank had frozen loan disbursements to the National Power Corporation. Under the plan, the IMF said the utility could postpone a rate hike until next year and the Philippines said it would attempt to control the corporation's mounting losses through privatization. "We have resolved that," Estanislao said in a Monitor interview. "Both the IMF and the World Bank are happy."