DOF backs 2 state-run banks as lending conduits in post-coronavirus stimulus package

The Department of Finance (DOF) is supporting the pitch of state-run lenders Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP) to serve as the government’s lending conduits in the middle of the fight against COVID-19.

Landbank president and chief executive Cecilia C. Borromeo told the House Defeat COVID-19 Committee last Tuesday (April 21) that the Philippine Economic Recovery Act (Pera) pending in Congress proposed to create seven lending programs to be implemented by also seven separate government agencies.

“To simplify administration and monitoring, and also to create consistency in lending curves and conditionalities, we suggest that the GFIs [government financial institutions] Landbank and DBP be the implementing entities for all lending programs,” Borromeo told the committee.

“Doing this will also simplify the messaging to the intended beneficiaries,” she said.

She said she was suggesting that government agencies mentioned in the bill “focus on policy-setting and direction-setting.”

These agencies included the Department of Trade and Industry and its attached agency, Board of Investments, Department of Tourism and Agricultural Credit Policy Council.

Two other agencies which are being given roles by the bill—Small Business Group Corp. and PhilGuarantee—could be “the credit guarantors of private lenders to the same intended beneficiaries of this economic stimulus,” Borromeo said.

Finance Secretary Carlos G. Dominguez III, who chairs Landbank, said Borromeo’s suggestions were “very sound advice.”

To help in COVID-19 lending, rural programs may be handled by Landbank, and the rest by DBP, Dominguez said.

Borromeo also recommended that the Pera bill’s proposed wage subsidies for critical businesses, freelancers, self-employed, and repatriated overseas Filipino workers (OFWs) by the Department of Labor and Employment (Dole) be made through Landbank given the state-run lender’s expertise in delivering amelioration and cash grants.

Landbank currently disburses money to beneficiaries of the conditional Pantawid Pamilyang Pilipino Program (4Ps) as well as unconditional cash transfer and subsidy programs.

Edited by TSB