The Monetary Board decided to extend for another three (3) years the original three (3)-year period allowing a separate single borrower’s loan (SBL) limit of 25% of the net worth of the lending bank/quasi-bank for loans, credit accommodations and guarantees granted for undertaking infrastructure and/or development projects under the Public-Private Partnership (PPP) Program of the government duly certified by the Secretary of Socio-Economic Planning.
It may be recalled that in December 2010, the BSP issued Circular No. 700 allowing a separate SBL for PPP projects for a period of three (3) years which is supposed to end on 28 December 2013. However, due to the long and complex process involved in the awarding of PPP projects, very few projects were awarded subsequent to said BSP issuance. Several PPP projects are still in the pipeline.
With the extension, the window will be opened until 28 December 2016. Loans, credit accommodations and guarantees based on the contracted amount as of 28 December 2016 period shall not be increased but may be reduced and once reduced, said exposures shall not be increased thereafter.
The extension of another three (3) years for the separate 25% SBL for PPP infrastructure and/or development projects is expected to encourage the financial sector’s participation in the PPP Program of the government, particularly with respect to the projects that are still in the pipeline