Dedicated to improving the country’s socio-economic competitiveness, Alberto Pascual is among the main drivers of mobilizing the state guarantee finance system, which intends to provide for all businesses and the significant majority of the government’s priority sector.

As the president and CEO of the country’s current principal agency for guarantee finance, the Philippine Guarantee Corp., (PhilGuarantee), Pascual has now embarked on the journey of imparting his experiences in the banking industry to aid PhilGuarantee’s main public service mandate: to support economic development.

“[W]e’re the only guarantee corporation in the country. Although two other agencies are allowed to issue guarantees, they’re not using it. So we’re saying that we’re the principal state guarantee institution,” he said during the exclusive interview in Daily Tribune’s recent “Straight Talk” episode.

Having extensive years of experience in finance, Pascual now continues to serve the public through the government-led corporation’s initiative of providing guarantees in contribution to their mandate of a more accessible and harmonized system in partnership with accredited banks ranging from rural, thrift, and even commercial.

Together with PhilGuarantee senior vice president Celso Gutierrez, they are committed to contributing their finance expertise and encouraging banks to collaborate with their program in support of lending to micro, small and medium enterprises (MSMEs) and the much larger sector of agriculture and human capital.

“So it’s basically trying to tell everyone, inform everyone. There could be support, but we’ll have to work together. The banks, the investors and us,” Gutierrez said.

Having been exposed to corporate and consumer lending, Pascual has been a key figure in the promotion of involving the private sectors and stakeholders in contributing towards key economic players such as farmers’ cooperatives, hospitals, education, housing and even public transport.

Through their finance guarantee program, Pascual affirmed that they are taking strides in ensuring that the lending system present in the country could be shaped into a more reliable finance avenue where even high-risk sectors will be allowed to be guaranteed.

“Under our charter, we are supposed to mobilize private funds to lend to these priority sectors…[T]o encourage banks and finance institutions to lend to these high-risk sectors and priority sectors of the government,” Pascual said, further emphasizing that PhilGuarantee aims to actively participate in lending towards the agriculture sector.

HGC, PhilEXIM functions assumed

Established after a merger process in 2018 under the administration of then-President Rodrigo Duterte, PhilGuarantee has consolidated the functions of two government agencies which are the Home Guaranty Corp (HGC) and the Philippine Export-Import Credit Agency (PhilEXIM).

PhilGuarantee now aims to become a trusted State-Owned Enterprise in the Philippines, emphasizing inclusion in financing concerns in various economic sectors and contributing to the ASEAN community.

Pascual also shared that he and the rest of the guarantee corporation could adopt the same system setup as other Asian countries such as Nepal, Mongolia, Indonesia and Malaysia after having said they attended a conference with the Asian Guarantee Corporation.

Aside from PhilGuarantee, the other similar corporations in Asia are those of China United SME Guarantee Corporation, Korea Technology Finance Corporation (KOTEC), and Small Industries Development Bank of India (SIDBI).

With PhilGuarantee leading as the country’s only guarantee corporation, Pascual also shared that it is the “full plate and credit of the Republic of the Philippines” working under the Department of Finance.

Their joint efforts with the Department of Agriculture (DA) in addressing financial concerns, particularly for the farming guarantee fund, have established a shared responsibility among the government’s priority sector focused on the emerging agriculture sector.

Under Executive Order 58, PhilGuarantee has taken over the guarantee function for MSMEs in the country.

The industrial guarantee loan fund, previously managed by the Development Bank of the Philippines (DBP), has now also been transferred to PhilGuarantee as part of the continuity of its vital finance services.

Bigger mandate

As a still developing agency in a developing country, Pascual shared that the agency seeks a change in its current charter.

He stated that the proposal would not only solve “inconsistencies” with their finance-related programs brought about by the PhilEXIM charter and prevent conflicts of interest in management but also bring about significant benefits and expand the scope of their current mandate.

Pascual affirmed that despite the proposed revision, the agency can function and operate with its existing mandates but it remained hopeful that it will have improved bylaws by 2025.

He added that they also have the support of the World Bank on changing the charter.

Another advantage that Pascual and Gutierrez emphasized is the confidence they can offer to banks or clients after securing their guarantee functions, particularly with small and high-risk enterprises.

“Because of the guarantee, they become more aggressive. And those sectors that they don’t touch before such as agriculture or microfinance, they’re able to do it because of PhilGuarantee’s partial guarantees. So we share in the risk,” Pascual said.

As of writing, Pascual confirmed that they have already generated about P7 billion guarantees for MSME, P170 billion to P200 billion for housing, including their contribution to the current affordable housing initiative “Abot Kaya Pabahay Fund” and P45 billion for the agriculture sector.

Recently, the guarantee corporation was also able to sign a memorandum of understanding with Water.org or the nonprofit organization in charge of providing safe water sanitation globally, including in the Philippines, in collaboration with giving guarantees to its infrastructure partners to protect and prevent risks in lending for their various potential value chains in the country.

Pascual reaffirmed the agency’s commitment to remain financially inclusive, emphasizing the efforts to contribute to providing guarantees to lenders for housing, small businesses, as well as food and agriculture as the main priority sector of the government.

“In a small way, since we’re in the background, we provide guarantees to lenders,” he said. “[A]ny project that will support the economic development and employment, we can provide guarantee,” he said.