BSP okays $38.6-M loans for micro-enterprises

The Bangko Sentral ng Pilipinas (BSP) has approved a $18.6-million worth of concessional loan for micro-enterprises in the rural areas and a $20-million commodity loan for budget support in 2005.

The Monetary Board of the BSP approved the commodity loan from the US under the Farm Bill or Public Law 480, an annual commodity loan facility used by the government to support its budget requirements.

Under the commodity loan, the US lends the Philippines the equivalent of $20 million worth of farm commodities, usually cereals like wheat, corn or rice.

The government then sells the commodity and the proceeds are used for budgetary support purposes.

BSP Deputy Governor Amando M. Tetangco Jr. said the commodity loan was approved by the MB in its meeting on Thursday and the importation would be undertaken through the Commodity Credit Corp. (CCC) of the US.

The P.L. 480 food aid program is comprised of three titles. Each title has different objectives and provides agricultural assistance to countries at different levels of economic development.

The Philippines avail of Title I of the P.L. 480 program administered by the US Department of Agriculture and Title II is administered by the US Agency for International Development (USAID). Title III is currently not funded.

Title I provided for the sales of US agriculture commodities on concessional credit terms to governments and private entities in developing countries. When allocating assistance under the Title I program, priority is given to agreements that provide for the export of US agricultural commodities to those developing countries which have demonstrated the potential to become commercial markets.

According to Tetangco, the MB also approved a $18.6-million worth of special drawing rights from the International Fund for Agricultural Development (IFAD), an arm of the United Nations.

The facility represented highly concessional loan from IFAD to the National Government, with a maturity of 40 years including a 10-year grace period with zero interest.

According to Tetangco, the IFAD loan would be used to bankroll a financing project for rural micro enterprises through a program to be implemented by the Department of Trade and Industry (DTI) together with the Small Business Guarantee Fund Corp.(SBGFC).

IFAD is a specialized agency of the United Nations established in 1977 as an international financial institution.

Since its inception, IFAD reported that it has financed over 550 projects in 115 countries, focusing mainly on the improvement in productivity of on and off-farm activities.