THE government will provide sovereign guarantees, through the state-run National Development Corp., on the P100-billion fund to be made available to private firms participating in the government?s the priority infrastructure projects, an official said yesterday.

The Cabinet approved the guarantee by floating bonds for the infrastructure fund, which accounts for a third of the P330-billion economic-stimulus package, Press Secretary Jesus Dureza said.

He said the Cabinet made the decision at the request of the Social Security System, Government Service Insurance System, Land Bank of the Philippines, and Development Bank of the Philippines, who were to contribute P12.5 billion each or P50 billion to the fund.

The other half of the infrastructure fund will come from other government financial institutions and state-owned corporations.

A member of the government?s economic team said the NDC would float long-term bonds to cover the loans.

?It will most likely be 10-year bonds to cover the duration of the infrastructure project,? said the Cabinet official who asked not to be named because he was not authorized to discuss the details of the Cabinet meeting.

?The NDC will borrow from government financial institutions and other private banks, while private companies may borrow from the NDC.?

The source said the economic managers did not discuss any caps on the amounts that private companies may borrow from the fund.

?But the NDC can give sovereign guarantees,? the official said.

?And NDC bonds are tax-discounted, so lenders to the fund can also avail themselves of tax exemptions. The fund will also be used for projects with good financial returns such as roads, the Light Rail Transit and airports.?

The source said the Cabinet had yet to approve the interest rate on the loans coming from the fund.

The remaining P230 billion of the economic-stimulus package will come from the government. Of that, P160 billion will come from the national budget, P40 billion from taxes, and P30 billion from the savings of various agencies and contributions from government financial institutions and government-owned and -controlled corporations. Joyce Pangco Pa?ares