DBP, LBP to manage, underwrite 17.5-B IRA monetization
LOCAL government units (LGUs) have designated the state-owned Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP) as joint issue managers and lead underwriters for its Internal Revenue Allotment Monetization Program (IMP).
The IMP involves the monetization of P17.5-billion Internal Revenue Allotment (IRA) receivables due to LGUs.
Under the program, LGUs have the option to monetize in advance their respective shares from the unreleased IRA receivables at a discounted value.
The IMP is an offshoot of Malacañang's Executive Order 494, directing the Department of Finance, the Department of Budget and Management, and the Department of the Interior and Local Government to take the necessary steps to ensure that the LGUs receive their respective share from the P17.5-billion unprogrammed IRA in 2000 and 2001 on an installment basis from 2007 to 2013, or enable them to avail themselves of their respective shares from the unreleased IRA through a monetization program.
The monetization program will be managed by both DBP and LBP. DBP's Trust Services Department and the LBP Trust Department will act as cotrustees of a Special Purpose Trust for the monetization program.
DBP president and chief executive officer Reynaldo G. David said the program offers the lowest transaction fees to LGUs, considering that this is a government-to-government transaction.
The discount rate of the IRA certificates will be auctioned off by the Bureau of Treasury at market rates thereby attaining competitive and transparent pricing.
This will also maximize the benefits due to LGUs and their constituents through higher net proceeds.
Distribution of documents for the IMP will be made through the DBP and LandBank branches and the LGU Leagues starting March 6, 2006.
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