Taiwan is bailing out the Musa administration...again. The same country that gave $100 million for housing in 1999 and $16 million two months ago for the water company buyback is now giving government a balance of payments bailout. Today's press briefing from Cabinet announces that on Friday government will take a motion to the House authorizing a $50 million loan from the Taiwanese Government.
The expressed purpose for the loan is what government calls "balance of payment support," which we take to mean meeting debt service obligations in foreign currency. The loan will be disbursed over two years: $30 million for January 2006 and $20 million for January 2007. As negotiated by Home Affairs Minister Ralph Fonseca, it will be re-paid at a 5% interest rate over a 20 year term, with a 3 year grace period.
In August of 1996, the Taiwanese government came through similarly for the Esquivel administration when it provided US$26 million to erase the deficit. That money was deposited at the Central Bank, and disbursed over three years to meet payments for debt taken on commercial terms. In the budget, it was classified as "extraordinary receipts," a classification which earned great ridicule from the then PUP opposition.
