Ties That Bind
Ex-Im Bank provides a variety of financing mechanisms, including working-capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
In what could be a landmark deal, the Export-Import Bank of the United States (Ex-Im Bank) has signed a US$1 billion energy-based memorandum of understanding (MOU) with the Philippines’ Department of Energy (DOE).
Specifically, the MOU targets renewable-energy and liquefied natural gas projects in hopes of upgrading and expanding the Philippine energy supply as part of US-Philippines bilateral cooperation.
“The arrangement is a win-win for both our nations and evidences our deep ties and cooperation on numerous economic fronts,” Ex-Im Bank Chairman and President Fred P. Hochberg said in a statement released by the US embassy in Manila.
The MOU was signed recently in Washington, DC by Ex-Im Bank board director Patricia Loui and DOE undersecretary Raul B. Aguilos.
Under the MOU, Ex-Im Bank and the DOE will exchange information with an eye to matching development needs in the Philippines with innovative goods and services offered by American exporters.
Since 1993, Ex-Im Bank provided US$1.3 billion in energy-sector finance to the Philippines.
“We aim to outdo ourselves and target another billion with this memorandum of understanding,” Loui said.
“Our expertise can contribute both to the renovation of current energy-production facilities and the construction of new ones,” she added.
In 1994, Ex-Im Bank financed the first project-finance transactions in the Philippines for geothermal energy – the Cebu geothermal, US$170 million; and the Mahanagdong geothermal project, also in Cebu, US$211 million.
Ex-Im Bank is an independent federal agency that creates and maintains U.S. jobs by filling gaps in private export financing at no cost to American taxpayers.
The Bank provides a variety of financing mechanisms, including working-capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
In the past fiscal year alone, Ex-Im Bank earned for U.S. taxpayers more than US$1 billion above the cost of operations.
In FY 2013, Ex-Im Bank approved more than US$27 billion in total authorizations to support an estimated $37.4 billion in U.S. export sales and approximately 205,000 American jobs in communities across the country.
This year, the Bank approved a record 3,413 transactions– or 89 percent–for small-businesses.
The Ex-Im DOE deal is in line with the U.S.-Philippines Partnership for Growth (PPG), program.
The highly innovative program, which resulted from US President Obama’s September 2010 policy directive on global development, is a high-level initiative focused on economic growth in countries committed to good governance.
In the Philippines, the PPG aligns with policy reform areas outlined by President Aquino in the Philippine Development Plan.
Under the plan, the US has committed to placing the Philippines on a path to sustained and more inclusive economic growth, and elevating it to the ranks of other high-performing emerging economies.
As envisioned, the US-backed PPG takes a comprehensive approach to development that reaches beyond traditional foreign assistance.
It also aims to address the most significant constraints to growth and to stimulate inclusive economic expansion. A joint analysis identified governance and inability to capture revenue as the top constraints to growth in the Philippines.
The PPG leverages the resources and tools of partners, especially the private sector, to increase the effectiveness of policies and institutions necessary for development.
USAID and Millennium Challenge Corporation provides more than US$800 million funding over five years to support PPG projects.
The U.S.-Philippines five-year Joint Country Action Plan prioritized the creation of a more transparent, predictable, and consistent legal and regulatory regime.
Similarly, it seeks to foster a more open and competitive business environment, strengthen the rule of law and support fiscal stability through better revenue and expenditure management.
The U.S. government has committed to a sustained inter-agency engagement in support of the PPG’s goal and objectives.
Since2011, the Philippine government has made significant progress in implementing policy and institutional reforms.
It has also achieved remarkable improvements in economic growth, competitiveness, tax revenues, and sovereign debt ranking to ensure that the growth generated is inclusive and sustainable.