With the country geared towards boosting the agriculture sector, the Bangko Sentral ng Pilipinas (BSP) urged the passage of amendments to Republic Act No. 10000 or “The Agri-Agra Law,” a priority measure of the central bank for the 18th Congress.
BSP Governor Benjamin Diokno said the BSP’s legislative agenda will help usher the Philippines’ next stage of economic development.
“The Agri-Agra Bill will strengthen rural development by providing a holistic approach in addressing the financing needs of the broader agricultural financing ecosystem,” Diokno said.
According to the Philippine Statistics Authority, agriculture, forestry and fishing declined in the fourth quarter of 2020 by 2.5 percent , resulting in a full-year decline of 0.2 percent in 2020.
In a statement at the Senate Committee on Agriculture, Food, and Agrarian Reform hearing today, Monetary Board Member V. Bruce Tolentino asserted the agricultural sector’s significant role in promoting inclusive and broad-based economic growth.
The proposed amendments to the Agri-Agra Law—House Bill No. 6134 or the bill approved in the House of Representatives—are aimed to principally tackle the persistent challenges in agriculture financing that emanate from both the borrowers’ side and the banks’ and lending institutions’ side.
“The BSP said it fully supports the objectives driving the various Agri-Agra bills which seek to strengthen rural development through holistic approaches that consider the broad context for agricultural financing and rural community development,” Tolentino said.
At end-December 2020, the banking system extended a total of P713.6 billion in Agri-Agra credit. Even with such an amount, banks were still unable to comply with the mandatory Agri-Agra credit.
The P642.4 billion in agricultural credit during the period translates to a nine percent compliance ratio, which is below the 15 percent requirement.
The P71.2 billion in agrarian reform credit translates to a 1.0 percent compliance ratio, which is below the minimum 10 percent.
Components of the amendments include:
enhancing access by rural communities to private sector financing, for example, by expanding the modes of compliance by banks;
creating an Agribusiness Management Capacity and Institution-Building Fund or the “Special Fund” that will be used to finance organizational-, capacity- and institution-building programs and activities of rural agricultural and fisheries households;
establishing an Agricultural and Fisheries Finance and Capacity-Building Council or briefly, the “Council,” which shall be responsible for the management and operations of the Special Fund.
As part of the comprehensive amendments to the Agri-Agra law, the BSP, Department of Agriculture and the Department of Agrarian Reform approved the amendments to the Implementing Rules and Regulations the Agri-Agra Law last March 2021.
This as an interim measure pending the passage of the proposed amendments to the Agri-Agra Law. (JOB)