The Department of Finance (DOF) is looking at the possible merger of the Philippine Export-Import Credit Agency (PhilEXIM) with other state-run guarantee firms to create a new single entity that would provide fresh funds for a new government guarantee system.

Finance Secretary Carlos Dominguez III said that under Republic Act 10149, which aims to promote the financial viability and fiscal discipline of government-owned and controlled-corporations (GOCCs), the Governance Commission for GOCCs (GCG) can carry out the reorganization, merger or streamlining of state-controlled firms.

Under the law, the GCG can also recommend to the President the abolition or privatization of GOCCs.

The PhilEXIM, which is attached to the DOF, provides credit, credit insurance and guarantee facilities primarily to export-oriented industries, including small and medium enterprises.

Dominguez said the consolidation of PhilEXIM with other state guarantee firms such as the Small Business Corp., Quedan & Rural Guarantee Corporation and the Home Guaranty Corp. can be done through executive fiat as provided under RAn10149 or the GOCC Law.

“We have a GOCC law so we can put them all in one organization and then just create a new one without necessarily going to Congress,” Dominguez told finance and treasury officials at a recent DOF Executive Committee meeting.

He directed DOF Undersecretaries Antonette Tionko, who heads the Corporate Affairs Group; Bayani Agabin, who is in charge of legal services; Karen Singson, who heads the Privatization Office; and National Treasurer Rosalia De Leon to draw up a plan on how to carry out the proposed consolidation or merger.

De Leon recommended that the merger would have to separate the old PhilEXIM structure from the new PhilEXIM.

She said the old PhilEXIM would mainly be a collecting agency in charge of handling the existing assets of the firm while the new PhilEXIM would be a new corporation that would exclusively handle guarantee services.

The budget of P500 million of the existing PhilEXIM would be carried over to the new corporation, but another P500 million would be needed as fresh capital infusion to comply with Bangko Sentral requirements and enable the new PhilEXIM to grow, De Leon said.

Singson said the the GOCCs involved in the plan would have to take a “write down”–which means a reduction of the book value of their respective assets–before the consolidation can take place.