Landbank, DBP get P40-B equity for lending to recession-battered firms

MANILA, Philippines—Two government financial institutions (GFIs) have been fortified with a total of P40 billion in additional equity for lending to businesses hit hard by the pandemic-induced recession.

The Department of Budget and Management (DBM) approved on Feb. 4 and then issued on Tuesday (Feb. 10) a special allotment release order (Saro) amounting to P27.5 billion to the state-run Land Bank of the Philippines (Landbank).

The DBM said the Saro for Landbank was “the national government equity contribution to support loan programs for beneficiaries affected by the COVID-19 pandemic pursuant to Republic (RA) Act No. 11494” or the Bayanihan to Recover as One Act.

Last Feb. 5, the DBM released P12.5 billion in equity infusion to the state-run Development Bank of the Philippines (DBP) for loans and interest payments of pandemic-battered borrowers also under the extended Bayanihan 2 law.

State-run Philippine Guarantee Corp. (PhilGuarantee), meanwhile, was still awaiting release of P5 billion for its credit guarantee program, according to its president and chief executive Alberto E. Pascual.

For local government units (LGUs), the DBM also on Tuesday released P37.65 million to the Department of Finance’s (DOF) Bureau of the Treasury to be spent on Bayanihan 2-related programs and projects.

Separate data from the DOF’s Bureau of Local Government Finance (BLGF) showed that while it issued 26 certificates of net debt service ceiling and borrowing capacity for LGU borrowings totalling P9.58 billion in January, not one province, city, municipality or barangay borrowed for COVID-19 response-related programs or projects that month.

Majority of LGU borrowings last month were nonetheless intended for infrastructure projects, including some to build local hospitals.

Last year, only 18 LGU borrowings were allotted in COVID-19 response out of 271 LGUs which had borrowed to add to add to their funds amid the pandemic.

The DOF had been urging LGUs to “make the best use of their borrowing capacity to bolster recovery programs” from the health and socioeconomic crises inflicted by COVID-19, given availability of financing facilities being offered by DBP, Landbank and PhilGuarantee.

Edited by TSB