LAST June, President Ferdinand Marcos Jr. ordered the Department of Human Settlements and Urban Development (DHSUD) led by Secretary Jose Rizalino Acuzar to study the cost and feasibility of issuing sovereign guarantees for state housing projects. The rationale is that guarantees from government would encourage state and private banks to lend to the public housing program.
Sovereign guarantee simply means that if the borrower of the loan defaults in payments, the state will come in to pay the obligation. In other words, government funds collected through taxation and other sources, such as investment incomes and even foreign loans, may be used to cover the obligation incurred within the sovereign guarantee arrangement.
In a recent Palace media briefing, Secretary Acuzar said the President has given his approval to tap sovereign guarantees for housing loans. Marcos did so at a sectoral meeting with DHSUD officials in Malacañang Palace.
‘As presented by Acuzar, sovereign guarantees for housing loans indeed look like a game changer.’
Acuzar said the approved sovereign guarantees would be used for the developmental loans of the National Housing Authority (NHA) and Social Housing Financing Corporation (SHFC) to expedite the construction of housing projects under the 4PH and address backlogs in residential units.
Speaking of housing backlogs, the latest figure still stands at 6.5 million units, more or less the same number we had during the past Duterte administration. This means two years of the Marcos administration did not make a dent in improving the statistics on the housing backlog. It can also be interpreted thus: the country’s population growth rate is so high that the provision for residential housing would necessarily be left behind.
“This guarantee will be used to speed up the construction because in the past, what we used was private money, and the funds came in very slowly. Since it will be loaned, the only borrower will be the government — the National Housing Authority and the Social Housing Finance Corp. (SHFC). I am optimistic that this guarantee will make the difference in our quest to finally address homelessness in the country,” Acuzar added.
The human settlements secretary said the approved funding guarantee could be a “game changer” as the Marcos administration commits to providing Filipinos with “decent yet affordable” shelters through a whole-of-nation approach. This, as he admitted that fast-tracking the construction of housing units is a “big” challenge for the government since most of the 53 ongoing projects under the 4PH are funded by private entities.
Acuzar pointed out that under the new plan, the government will serve as the “developer” of the housing units. This is different from the old system where the contractor will look for funds and wait for a long time to avail themselves of these loans. If the government borrows money through the NHA and SHFC, these two agencies will undertake the biddings for housing construction. Private developers would be eased out of the process and their developers’ profit would redound to the government to be used for more projects.
Malacañang Press Briefer Daphne Oseña-Paez meanwhile said Marcos also directed the DHSUD and concerned government agencies to continue studying different financial scenarios of possible sovereign guarantees for developmental loans.
Oseña-Paez said Marcos also ordered a further review of rate of interest subsidies that may be undertaken by the government to alleviate financial burden on potential 4PH homeowners by reducing amortization costs.
As presented by Acuzar, sovereign guarantees for housing loans indeed look like a game changer. Several Cabinet members who have reservations on sovereign guarantee arrangements should also be heard by the President, for they might have solid objections to the state again taking responsibility for failed projects.
