ICC CabCom approves four ODA projects on road improvement and transportation

A February 21, 2012 press release from the National Economic and Development Authority
The Investment Coordination Committee-Cabinet Committee (ICC-CabCom) of the National Economic and Development Authority (NEDA) Board recently approved four road and transportation projects that will be funded through Official Development Assistance (ODA) from the country’s development partners.
First of these projects is the Baler-Casiguran Road Improvement Project that seeks to improve road access within the province of Aurora. The project involves completion of the road’s remaining 50.95 kilometers unpaved road out of the 116.37-kilometer Baler-Casiguran Road section.
“This road improvement project will also ensure interregional connectivity between Region II and III, promote tourism, and facilitate trading, commerce, and delivery of local farm products within Aurora and to major market areas in Luzon,” said Socioeconomic Planning Secretary Cayetano W. Paderanga Jr.
The road completion will link the following municipalities of Aurora: Dilasag, Casiguran, Dinalungan, Dipaculao, Ma. Aurora, Baler, and San Luis. This will also connect Cagayan Valley road, Quirino, and Isabela to the province of Aurora through the existing Dinadiawan-Maddela-Cordon interprovincial road.
The project, which the Department of Public Works and Highways (DPWH) spearheads, is being proposed for loan financing from the Korea Economic and Development Cooperation Fund (EDCF).
The second project approved by the ICC CabCom is the Samar Pacific Coastal Road, which will link the coastal towns of Northern and Eastern Samar and complements and completes the circumferential road loop for the province. The DPWH-proposed project has a total length of 27.75 kilometers.
“The Samar Pacific Coastal Road project will enhance the development of potential agricultural lands and fishing grounds of Northern and Eastern Samar and facilitate movement of goods and services through access to major arterial road links. This will push the area’s full economic potential and reduce its high poverty incidence,” Paderanga said.
The project, which is part of DPWH’s updated Public Investment Program (PIP) and the Comprehensive and Integrated Infrastructure Program (CIIP), will also be financed through Korea EDCF loan.
The third ICC CabCom-approved project is the Bridge Construction Project for Expanded Agrarian Reform Communities (ARC) Development-Umiray Bridge, under the Department of Agrarian Reform (DAR). It covers construction of a 358-lineal meter bridge that will cross the Umiray River along the boundaries of Dingalan, Aurora and General Nakar, Quezon.
“The bridge will provide infrastructure support to agrarian reform beneficiaries and communities to help uplift their living conditions especially those in eleven barangays of Dingalan, Aurora and nineteen barangays General Nakar, Quezon,” said Paderanga.
The bridge project costs a total of P798.56 million, which will be implemented through grant assistance from the Japan International Cooperation Agency (JICA). It is one of the two bridges, along with the Bazal Bridge, under the Bridge Construction Project for Expanded ARC Development.
The fourth approved project is the Market Transformation through Introduction of Energy Efficiency Tricycle (E-Trike) Project, which will make 100,000 electricity-run tricycles to replace aging and two-stroke gasoline-fed units. The E-Trike project targets local government units (LGUs) of Metro Manila, Boracay in Aklan, Puerto Princesa City in Palawan, Cabanatuan City in Nueva Ecija and Davao City.
“The Philippines would benefit in the utilization of electric vehicles to reduce the country’s dependence on price-volatile petroleum fuels. It will also reduce the carbon footprint of the transport sector in Metro Manila and LGUs in the country,” he said. Carbon footprint is a measurement of the amount of greenhouse gases produced daily by individuals through burning fossil fuels for electricity, heating, and transportation, et  cetera.
The E-Trike project, spearheaded by the Department of Energy (DOE), has an approved cost of P21.50 million that will be partially funded by the Asian Development Bank (ADB).
The ICC CabCom’s approval of the four ODA projects will be endorsed to the NEDA Board for its confirmation.
The NEDA Board, chaired by President Benigno S. Aquino III, is the country’s highest development planning and policy coordinating body. It is composed of various Cabinet Secretaries, the President of the Union of Local Authorities of the Philippines (ULAP), the Governor of the Autonomous Region in Muslim Mindanao (ARMM) and the Deputy Governor of the Bangko Sentral ng Pilipinas (BSP).
The ICC, which is one of the seven interagency committees of the NEDA Board, evaluates the fiscal, monetary and balance-of-payments implications of major national projects. The ICC’s powers and functions reside in its CabCom, which is headed by the Secretary of Finance. The ICC is supported by an interagency Technical Board, with NEDA as ICC Secretariat.
neda.gov.ph

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Decision day for 2nd Greek bailout, financing gaps remain

By Luke Baker
BRUSSELS (Reuters) – Euro zone finance ministers are expected to approve a second bailout for Greece on Monday, a move they hope will draw a line under months of turmoil that has shaken the currency bloc, although there is work to be done to make the figures add up.
Diplomats and economists do not expect the package to resolve Greece’s economic problems: that could take up to a decade or more – a bleak picture increasingly apparent to several thousand Greeks who demonstrated on Sunday against seemingly endless austerity measures.
The ministers still need to agree new measures to square the numbers, given the ever-worsening state of the Greek economy. But they hope agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the single currency zone.
Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro programme, including a debt sustainability analysis critical to the IMF.
While there is still scepticism in Germany and other countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was building for approval of the deal.
“At the moment it appears it will go exactly this way,” Austrian Finance Minister Maria Fekter said on Sunday when asked in a TV interview if the package would be approved. “I don’t think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money.”
A euro zone official in contact with junior ministers involved in the Sunday conference call said that, while there were still gaps to be filled, they were not so large that they risked derailing the whole process.
“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.
“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, which have been the most critical of Athens‘ ability to commit, looked likely to come on board if the financing gaps could be closed.
GREEK ANGER UNABATED
Several thousand Greeks demonstrated on Sunday against punishing austerity measures to reduce their country’s debt, on the eve of the make-or-break talks.
Greek Prime Minister Lucas Papademos flew to Brussels for last-minute preparations as about 3,000 demonstrators massed on the capital’s central Syntagma square.
Riot police shielded the national assembly, braced against a repeat of riots a week ago that saw buildings torched and looted across downtown Athens after a much larger rally involving tens of thousands.
Under one crucial element of the deal, Greece will have around 100 billion euros of debt written off via a restructuring involving private-sector holders of Greek government bonds.
Banks and insurers will swap bonds they hold for longer-dated securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.
The bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the 130-billion-euro programme will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, 23 billion will go to recapitalise Greek banks.
A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.
The overall objective is to reduce Greece’s debts from 160 percent of GDP to around 120 percent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.
MEETING THE TARGET
The focus of discussion in Sunday’s conference call – and the issue expected to dominate the finance ministers‘ meeting on Monday – was what “around 120 percent” means in practice.
A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 percent by 2020.
The IMF has said if the ratio cannot be cut to around 120 percent, it may not be able to help finance the Greek programme.
U.S. Treasury Secretary Tim Geithner urged the International Monetary Fund to support the programme.
“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF,” Geithner said in a statement on Sunday.
As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 percent in 2020 would still be sustainable.
“If we can get it down to 123 or 124 percent, I think everyone’s going to be okay with that,” the euro zone official said after the Sunday conference call. “Everyone will find a way to tweak the numbers.”
A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners”, are being considered to move the 129 figure closer to 120, a euro zone official familiar with the negotiations said.
There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.
Central banks could help too.
The ECB is weighing up whether to allow Greek bonds held in euro zone central banks’ investment portfolios to be subject to the same writedowns private investors are set to take, central bank sources told Reuters on Friday.
The central banks hold around 20 billion euros of Greek bonds in their traditional investment portfolios and the ECB holds about double that amount from its emergency bond-buying programme. It has also signalled it could forego the profits made on the latter at some point.
“All the discussions I will have … until Sunday night will try to move the figure nearer to the target,” Luxembourg’s Jean-Claude Juncker, who will chair Monday’s finance ministers’ meeting, said on Friday, referring to the 120 figure.
If the finance ministers do succeed in reaching an agreement on Monday, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.
But no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.
The troika, which is responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground in Athens as part of the second package.
Already there is concern that at any one of those reviews of the new programme – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.
That will again raise the threat the country will have to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.
(Additional reporting by George Georgiopoulos, writing by Luke Baker and Mike Peacock, editing by Tim Pearce)
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Flooded businesses eligible for low-interest loans

Low-interest loans of up to $2 million are now available to small businesses, farms and nonprofits in Brevard and five other counties hit by heavy rains in early October, the U.S. Small Business Administration has announced.
The federal economic injury disaster loans will be provided to small businesses, agricultural cooperatives, aquaculture operations, and most private non-profit groups in Florida harmed by excessive rain, flooding and high winds that hit the region Oct. 7-9, 2011.
The five other eligible counties are Indian River, Martin, Okeechobee, Osceola and Saint Lucie.
“When the Secretary of Agriculture issues a disaster declaration to help farmers recover from damages and losses to crops, the Small Business Administration issues a declaration to eligible entities affected by the same disaster,” Frank Skaggs, director of SBA’s Field Operations Center East in Atlanta, said in a release.
Under the declaration, the SBA’s Economic Injury Disaster Loan program is available to eligible farm-related and nonfarm-related operations that suffered financial losses as a direct result of the disaster. With the exception of aquaculture, SBA can’t provide disaster loans to agricultural producers, farmers or ranchers, SBA said in the release.
The loans can be up to $2 million with interest rates of 3 percent for private non-profit groups and 4 percent for small businesses, with terms up to 30 years. The SBA determines eligibility based on the size of the applicant, type of activity and its financial resources.
The SBA determines the loan amounts and terms and are based on each applicant’s financial condition. The working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not happened. But they aren’t intended to replace lost sales or profits.
Completed loan applications must be returned to SBA no later than October 9, 2012.
Contact Waymer at 321-242-3663 or jwaymer@floridatoday.com

How to apply

U.S. Small Business Administration loans available for those affected by Oct. 7-9 heavy weather:
For information, call 1-800-659-2955 (800-877-8339 for the deaf and hard-of-hearing) or e-mail to disastercustomerservice@sba.gov.
Loan applications can be downloaded from www.sba.gov.
Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
You can also apply for disaster loans electronically from SBA’s website at https://disasterloan.sba.gov/ela/.
Completed loan applications must be returned to SBA no later than Oct. 9, 2012.
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Geithner says 2010 law made financial system 'stronger and safer'

Reporting from Washington—
Treasury Secretary Timothy F. Geithner has a message for voters as they listen to Republican presidential candidates call for repeal of the 2010 Dodd-Frank financial overhaul law: Remember the pain.
“I would say remember 2008 and 2009,” Geithner told reporters Thursday during a news conference touting the benefits of the overhaul. “Remember the fact that the reason why we’re living with very high unemployment with millions of Americans that have lost their homes, terrible damage to the basic economics of America is because of the failures that caused this crisis in the financial system.”
“And if you want to go back to that,” he said, “if you want to choose that future, then you should be in favor of the repeal of the law.”
Republican presidential candidates have hammered away at the sweeping rewrite of financial regulations.
At a debate in Florida last month, GOP frontrunner Mitt Romney said the law was “just killing the residential home market and it’s got to be replaced.”
Newt Gingrich was more blunt. Asked what could be done to help struggling homeowners, he said, “I think, first of all, if you could repeal Dodd-Frank tomorrow morning, you would see the economy start to improve overnight.”
In the face of such criticism on the campaign trail and from Republicans in Congress, Geithner defended the law.
He said it already had helped the financial system become “stronger and safer” even as some key provisions, such as the Volcker Rule restriction on banks trading with their own money, are still being implemented by regulators.
Speaking as the head of the Financial Stability Oversight Council, a panel of regulators created by the law to monitor the financial system for signs of problems, Geithner said the law had helped the economy recover.
Regulators this year would designate the large financial firms outside the banking system that will receive tougher oversight because their failure would pose a risk to the financial system, he said.
And the Obama administration would release more details about its plans to overhaul the housing finance system and replace Fannie Mae and Freddie Mac, which the government seized in 2008.
Republicans and business groups have criticized the hundreds of regulations required by the new law and tough new oversight, including the creation of the Consumer Financial Protection Bureau.
They have said that the uncertainty about pending regulations has made businesses hesitant to hire, and that tough new rules on banks, such as requiring them to hold more reserves, was limiting the banks’ ability to make loans to boost the recovery.
But Geithner said the new rules were badly needed to prevent a repeat of the crisis, and he criticized opponents who were trying to drag out implementation of the Volcker rule and other provisions. Slowing those changes would only increase uncertainty, he said.
“No financial system is invulnerable to crisis. We have a lot of challenges ahead. We still have a lot of unfinished business on the path of reform,” Geithner said. “But the American financial system now is much less vulnerable than it was and is now able to help finance a growing economy, rather than being a drag on overall economic growth.”
RELATED:
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O'Malley proposes extra $15 million to help build rental housing, create jobs

Gov. Martin O’Malley is proposing a $15 million increase in the state’s program to help build affordable rental housing, saying the bump would leverage $285 million in private investment and create 1,100 jobs in Maryland.
Surrounded by housing advocates, construction workers and local residents, O’Malley went to the site of a former public housing development in Annapolis to announce plans to double the state’s investment in loans to developers to help spur rental housing construction.
The governor said the increased spending would help address a shortage of affordable housing by providing gap financing for about 20 privately owned rental developments in the next fiscal year. But his emphasis was on the employment the money would bring.
“This announcement here today is about creating jobs,” O’Malley said at the site where the privately owned Obery Court complex is under construction with the help of existing state spending. “This is a time to go out in the market and try and put our people back to work.”
Senate Minority Leader E.J. Pipkin disagreed, saying the initiative “doesn’t make any sense.”
“We’re seeing more and more dollars going into things the private sector should be doing,” the Upper Shore Republican said.
The administration said it has maintained state spending on affordable housing programs at $15.5 million a year despite budget pressures. O’Malley is proposing to nearly double that to $30.5 million through what the administration is calling its “Rental Housing Works” initiative. The new state money would help offset the loss of federal stimulus funds, housing officials said.
The announcement comes at a time when the state is facing a $1.1 billion shortfall in its general fund budget — a gap that must by law be closed.
O’Malley said the additional housing money would be part of the capital budget. The extra spending would be financed through additional borrowing but would not push borrowing beyond Maryland’s debt guidelines, he said.
Like all of the governor’s budget proposals, the housing plan is subject to General Assembly approval. “I think the legislature will keep it intact,” O’Malley said.
State officials say there is a severe lack of affordable housing in Maryland, with the shortage expected to reach 127,000 units in 2015. Andy DeVilbiss, spokesman for the state Department of Housing and Community Development, said the Rental Housing Works program would use the $15 million for “shovel-ready” projects.
Housing Secretary Raymond A. Skinner said the money is typically used to provide gap financing to make up the difference between what a developer can raise through the private sector and the cost of the project. He said the state loan for an individual project is typically about $1 million to $1.5 million.
While Skinner said each $1 in state lending leverages $19 in private funding, the developer of Obery Court gave more a conservative estimate for that project.
Mark Dambly, president of Pennrose Properties, said the three phases of the project will cost about $39 million, about $8 million of which will come from the loan program. He said the project, the second phase of which is now under construction, will build 175 to 180 units and create 900 jobs.
The governor’s announcement drew praise from housing activists.
“This is a big deal for us,” said Trudy McFall, president of the Maryland Affordable Housing Coalition. “Federal resources are down. We were facing a very grim year ahead of being able to do just a handful of projects. Now this will allow us to do 20 new rental communities.”
McFall emphasized that the projects the new spending will spur are not public housing. “It’s housing that’s developed by the private sector. It’s owned and managed by the private sector,” she said. Typical monthly rents are about $500 to $700 for a two- or three-bedroom unit, McFall said.
michael.dresser@baltsun.com

The Love Affair Between Politicians And Private Equity

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When President Bill Clinton’s time in politics was up, he landed at Ronald Burkle’s private equity firm, Yucaipa Companies. For six or so years after he left the White House, Clinton served as an adviser to various Yucaipa investment funds and those funds paid him a lot of money. Clinton finally ended his relationship with Yucaipa, reportedly walking away from a huge $20 million payday, because the relationship was deemed to be overly sensitive for Hillary Clinton’s political ambitions.
As Mitt Romney knows well, private equity and politics don’t always mix well during election season.  The front runner for the Republican presidential nomination has been under attack from his Republican rivals because of his private equity roots. Newt Gingrich’s  super PAC is releasing a short movie that attacks Romney for controversial private equity deals. “I am totally for capitalism,” Newt Gingrich recently said, “I do draw a distinction between [it] and looting a company.” Rick Perry has called Romney’s past private equity life a form of “vulture capitalism.”
But the fact is that politicians, both Republicans and Democrats, love the private equity industry. When Romney ran Bain Capital he was constantly searching for what private equity guys like to call an exit, which means selling a company for a big return. For a long time in Washington, the richest exit has been landing at a private equity firm, or in some cases, a hedge fund that makes private equity-like investments. Romney is only unique because he moved from the buyout business into politics and not the other way around.
The recent attacks on Romney have led to the inevitable debate about whether private equity is good for America. But there can be no debate about whether private equity is good for politicians once they leave the political arena. The New York Times recently highlighted the fact that Newt Gingrich himself was on the advisory board of Forstmann Little, a pioneering private equity firm.  The truth is it is tough to find a former prominent politician who has not joined the private equity club.
In addition to Clinton, there is former Vice President Dan Quayle, who is chairman for global investments at Cerberus Capital Management, where former U.S. Treasury Secretary John Snow is chairman.  Evan Bayh, the former Democratic Indiana senator and governor, is a senior advisor at Apollo Global Management. Rudy Giuliani was chairman of the advisory board of a Leeds Weld private equity fund, which was partly headed by former Massachusetts Governor William Weld. That private equity firm is now known as Leeds Equity Partners and the chair of its advisory board is Colin Powell. Two former U.S. education secretaries are also there.
David Stockman, a former congressman from Michigan and Ronald Reagan’s budget director, joined a private equity shop and eventually founded his own big-time private equity firm. Things did not work out for Stockman at Heartland Industrial Partners. He was indicted in connection with his role at a failed auto parts company, even though the federal government later dropped the charges.
Blackstone, the world’s biggest private equity firm, was co-founded by Pete Peterson, who was Secretary of Commerce during the Nixon Administration. Then there is the Carlyle Group, another massive private equity firm that has long been part of Washington mythology. Former President George H. W. Bush, former Secretary of State James Baker, former Defense Secretary Frank Carlucci, former Securities & Exchange Commission Chairman Arthur Levitt, and Bill Clinton’s White House chief of staff Mack McLarty, have all worked for Carlyle.
The private equity industry is one of the most lucrative places to work in America today. Buyout barons make huge political contributions. It is really hard to see this close relationship ending anytime soon.

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Jump in delinquencies for FHA loans raises fears of bailout

Concerns are growing that the Federal Housing Administration will need to be bailed out by taxpayers.
The agency’s latest monthly outlook report revealed a spike in serious delinquencies for FHA-insured loans, posing a further threat to the agency’s already depleted cash reserves.
According to the report, the percentage of loans in the FHA’s portfolio with three missed payments or more rose to 9.3% in November, up from 8.4% in August.
“It’s highly likely that the FHA will need a taxpayer bailout over the next three to five years,” said Joseph Gyourko, a real estate professor at the University of Pennsylvania’s Wharton School and author of a report entitled “Is FHA the Next Big Housing Bailout?.”
In November, an independent audit of the FHA’s finances found that losses from mortgage defaults had depleted the agency’s reserve fund to 0.24%, or $2.6 billion, during fiscal 2011 — well below the Congressionally-mandated 2% level. (The ratio measures the net worth of the reserve fund compared with the value of the loans FHA has insured.) In 2006, the reserve fund stood at 7%.
At the time, the agency’s auditor warned that if home prices continued to drop, FHA could run through the remainder of its reserves, forcing it to either seek a bailout from the Treasury Department or further increase the premiums it charges borrowers. The FHA doesn’t issue mortgages, but instead insures lenders against defaults.
Such a bailout could cost billions: Guyourko argues that the FHA is so undercapitalized that it would need at least $50 billion, even if the housing markets don’t deteriorate further. But even by more conservative measures, the agency would need at least $20 billion to meet the capital requirements mandated by Congress.
In early December, the House Financial Services Committee grilled Shaun Donovan, the Secretary of the U.S. Department of Housing Urban Development, over the possibility of a bailout. Donovan blamed FHA’s financial woes on loans made before 2009 and said that loans issued in recent years were experiencing a “dramatic decline in the rate of early payment default.” As a result of these healthier loans, he said the reserve fund would be able to return to the required 2% level in 2014.
Yet, Wharton’s Gyourko argues that the FHA has underestimated the risk of these more recent loans. Many of the new serious delinquencies were from loans issued in 2009 and 2010 and he projects there will be many more defaults to come.
One reason is that many of the borrowers who took out FHA-backed mortgages during this time relied on the First-Time Homebuyer Tax Credit for down payments. A large percentage of these borrowers didn’t have enough cash for the small 3.5% down payment that FHA requires, let alone the money to make their ongoing mortgage payments, he said.
Foreclosure free ride: 3 years, no payments
The FHA said that the vast majority of home buyers who claimed the tax credit used their own cash for down payments or borrowed from relatives and are therefore low risk.
Home prices will also play a key role in whether taxpayers will have to rescue the FHA, said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication.
“Given that most FHA loans are made with a 3.5% down payment, most are underwater within a year after price declines,” he said.
Many FHA borrowers are teetering on the edge of foreclosure and further housing price declines will push many of those over, exposing the agency to more losses. “I think there will have to be a bailout over the next couple of years,” said Cecala.
The FHA claims its total liquid assets are $400 million higher than a year ago and home prices would have to fall 4% to 5% before the agency would need a bailout. It said it has also recognized expected losses and planned for them by raising upfront insurance premiums to bolster its assets.
Still, that might be cutting it close. Home prices are projected to fall another 3% to 4% in 2012 before stabilizing, according to forecasting firm Fiserv.
For all the FHA’s problems, however, it has filled a great need over the past few years, said Cecala. Low-income and first-time home buyers have relied on FHA loans to finance their purchases. Without the backing of the FHA, fewer homes would have been sold and prices would be even lower.
“The housing market would be in far worse shape than it is,” he said.
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