PRESIDENT Arroyo yesterday said the government plans to float reconstruction bonds, likely through stated-owned National Development Co. (NDC), to help finance the rehabilitation of places ravaged by storm "Ondoy" and typhoon "Pepeng."

"Depending on the recommendation of the Special (Reconstruction) Commission, we may issue reconstruction bonds. I have already discussed this with Trade Secretary Peter Favila, who supervises the NDC, which seems to be the favorite recommendee of economic managers and business leaders as far as issuance of bonds is concerned," Arroyo said during yesterday’s mid-year Philippine Economic Briefing at the Shangri-la Hotel in Makati City.

Favila, after the briefing, placed the planned float at P50 billion.

Arroyo said it is best that NDC do the bond flotation because the global crisis has strained the national government’s capacity for direct borrowing.

She said government’s response to the most recent calamities that devastated Luzon "cannot just be another borrowing program."

"We don’t want to let grant opportunities go to waste. And even if we resort to bonds in bringing in exogenous resources, we will go beyond a mere borrowing program to provide a developing framework that is required by official development assistance programs," she said.

Budget Secretary Rolando Andaya Jr. supported the borrowing option, saying the government cannot use the proceeds from the sale of banked natural gas in Malampaya to finance the P12 billion additional calamity budget being finalized in both houses of Congress.

Andaya Jr. said the government would resort to fresh loans to fund the additional budget.

Andaya said the additional P12 billion will be included in the unprogrammed funding item in the 2009 budget amounting to P75.9 billion as it could not be treated as a supplemental budget for lack of an accompanying revenue measure.

Finance Margarito Teves said funding for the P12 billion additional budget would be sourced from a combination of local and foreign borrowings or from "re-allocated" funds in the unprogrammed items.

"There are many ways of handling this," he said.

Andaya also disclosed that DBM is seeking a last-minute P50 billion insertion in the proposed national budget for 2010 to cover expenditures for massive infrastructure work needed after the typhoons.

Andaya said the budget increase will be reflected in the capital outlay component of the budget for next year, which will see an increase of P50 billion to P233 billion from the proposed P183 billion.

The insertion will effectively restore the capital outlay to its 2009 level of P233 billion, he said.

Andaya said Malacañang will introduce the P50-billion increase possibly at the bicameral level.

Andaya said the additional appropriation will bloat the proposed P1.541 trillion budget by another P50 billion.

At the Senate, senators voted 16-0-0 Tuesday night to approve the proposed P12 billion emergency fund.

During deliberations, Angara accepted an amendment seeking to create a congressional oversight panel of five senators and five congressmen, co-chaired by the chairmen of the Senate finance committee and the House appropriations committee.

Enrile paid tribute to the Senate minority bloc for successfully placing in the resolution a strict reporting system on the disbursement and use of the fund by the line agencies through the National Disaster Coordinating Council.

The unanimous vote also came after Defense Secretary Gilbert Teodoro, chair of the NDCC, gave the assurance that he will be leaving the defense department and the NDCC "before the first disbursement of the emergency fund."

Teodoro is the administration’s 2010 presidential candidate and critics have raised fears he would use the P12 billion to advance his candidacy.

Teodoro’s assurance was conveyed through Sen. Aquilino Pimentel Jr. who said he had expressed to Teodoro his apprehension that the latter would be a beneficiary of the multi-billion emergency fund.

Today, President Arroyo will convene the Legislative-Executive Development Advisory Council to take up measures on relief and reconstruction.

On Oct. 30, she is expected to sign into law the Disaster Risk Reduction Bill.

An official of the Catholic Bishops Conference of the Philippines (CBCP) called on lawmakers to make sure there are enough safeguards in the budget being pushed for the augmentation of the government’s calamity funds.

Bishop Broderick Pabillio, CBCP National Secretariat for Social Action chairman, said the additional budget might go straight to the pockets of politicians.