RP set to receive 2nd tranche of $150-M loan

The government will soon receive the second tranche of the $150-million loan from the Asian Development Bank (ADB) that would fund programs on widening access of poor to microfinance and improve their financial literacy, the National Anti-Poverty Commission (NAPC) said.

The NAPC, which is under the Office of the President, said the government has commenced a nationwide campaign to educate the country’s four million poor households about available microfinance services in the country as it expects this month the second tranche of the ADB program loan.

The first tranche of the loan, worth around $75 million, was disbursed in November 2005.

Documents obtained from the microfinance division of the NAPC show that the Philippine Microfinance Literacy Campaign is a key component of the Philippine Microfinance Development Program (MDP), a government effort funded through a program loan from the ADB.

The loan agreement between the government and the ADB stipulates a package of policy reforms that include better consumer protection for microfinance borrowers and increased financial literacy among the country’s poor communities.

NAPC assistant secretary Dolores de Quiros Castillo said there is a need to help more poor Filipinos understand their financial options and recognize how to effectively use microfinance services to their advantage.

“Instead of microfinance products helping the poor out of poverty, the lack of knowledge on financial options could make the poor more susceptible to debt trap and low savings,” Castillo said.

Financial literacy can enlighten the poor on the products and policies of microfinance institutions — how to calculate and compare costs, how to determine their cash flow, select what they can afford and prioritize what they really need, she said.

More than three million poor Filipinos have secured loans amounting to around P74 billion through the government’s partner microfinance institutions over the past three years.

Around 31 percent of the country’s active microfinance clients are small farmers; 24 percent are poor fisherfolk; another 28 percent are informal workers; while 15 percent belong to the urban poor. The Filipino youth and indigenous folk comprise the remainder.

Present at the recent launching ceremonies of the financial literacy campaign held at the Bangko Sentral ng Pilipinas (BSP) in Manila were BSP  Deputy Governor Nestor Espenilla, Finance Undersecretary Gil Beltran, Eiichi Sasaki of the ADB, Edmon Sison of UPLIFT Philippines and Antonina C. Tiña of the PATAMBA Network of Internal Workers, as representatives of non-government organizations.