Marawi rehab estimate reaches P62 billion

July 16, 2018

The rehabilitation of  Marawi City could reach as much as P62 billion in more than five years, Finance Secretary Carlos Dominguez III said Monday.

Dominguez said government will plan on how to raise the amount, from national budget and official development assistance in the form of grants, to issuing Marawi bonds in the market.

A Department of Finance (DOF) statement said a report from Task Force Bangon Marawi (TFBM) Chairman Eduardo del Rosario has revised the estimated reconstruction to hit P62 billion.

Two months earlier, in May, the DOF has estimated the cost to be around P55 billion and has identified then the National Disaster Risk Reduction and Management Project Fund to shoulder half of that previous costing.

Dominguez said government “is currently working on the funding mix for P52 billion of the five-year P62-billion budget for the rehabilitation and reconstruction of the devastated city of Marawi”.

He said P10 billion was allocated in this year’s General Appropriation Act for the Marawi rehabilitation program “hence the need to explore ways on how to finance the additional P52 billion”.

“Now that we have a hard number, we will now go to the details on where the money will come from. Certain portions of the money will come from grants,” Dominguez said.

Japan and China were among the various countries that have committed to provide grants to aid in the reconstruction of Marawi City.

Japan earlier signed a two-billion yen assistance in May this year for the Marawi rehabilitation, its fourth financial grant since last year reaching a total of $36 million for Marawi’s relief and rehabilitation.

Dominguez, who signed the grant agreement on behalf of the Philippine government said the fourth package was approximately $18.66 million or about P970 million. Previous three Japan grants formalized on November 12 last year between the two governments included provision of heavy equipment for Marawi City’s reconstruction program.

Yoshio Wada, the chief representative in the Philippines of the Japan International Cooperation Agency signed the fourth aid package on behalf of Japan.

"This is over five years.  This is not immediate so it’s over five years and there is a progression, the total is P62 billion. So we will have to do now our financial planning,” Dominguez said.

Dominguez said the rehabilitation budget would cover the use of heavy equipment and the plan by the government to acquire certain properties in the area.

Some of the funds may be sourced from floating security bonds and Dominguez said the DOF was planning on the timing of its issuance. He said the DOF was thinking of issuing the bonds in several tranches.

“We would issue it definitely in tranches because we should not borrow more than what we need for that year. We have P10 billion already budgeted so we would go and get more details on how much is actually required and at what dates,” Dominguez said.

Government might issue the Marawi bonds as retail treasury bonds “so that people will really feel that they are participating in the rebuilding of Marawi City”, he added.

The tenor of the bonds would depend on market conditions and the issuance might be P10 billion a year, with the government “probably ending up raising maybe P40 billion of the P62 billion total rehabilitation cost”, Dominguez said. DMS