Philippine Government to sell San Miguel stake

Philippine President Gloria Arroyo said she will accelerate the sale of power plants and lines and the Government's 24 per cent stake in San Miguel to reduce the nation's budget deficit.

Arroyo will replace some officials in charge of selling the generators and transmission grid, she said in an interview. The Government may sell its indirect 6.9 per cent stake in Philippine Long Distance Telephone, the nation's largest phone company.

"We have our deficit management and revenue targets and we make decisions like these on the basis of what we need to meet our targets and create jobs," Arroyo said yesterday.

The Philippines, Asia's biggest seller of global bonds outside Japan, is trying to sell assets to pay debt and narrow its 31.5 billion peso ($975 million) budget deficit. The stake in San Miguel, the nation's biggest food and beverage company, is worth 62 billion pesos at market prices, while the Philippine Long Distance stake is worth about 26 billion pesos.

"There's not much that's been privatised since the end of President Fidel Ramos's term in 1998," said Luz Lorenzo, an economist at ATR-Kim Eng Capital Partners in Manila. "But I've seen her political will in terms of tax reform. I'm quite optimistic it can be done."

The country had $124 billion of debt as of May, though increased tax collection and lower-than-expected spending are improving government finances.

The Government plans to auction the country's power grid next month.

- BLOOMBERG