DA still keen on bond float

MANILA, Philippines — The Department of Agriculture (DA) is still keen on pushing for a bond flotation program that will finance its projects such as farm to market roads (FMR), solar-powered irrigation, among others.

In an interview, Agriculture Secretary Emmanuel Piñol told reporters that his agency would still push for the bond flotation program it announced last year.

“As you have read in my post, I have identified four key investment areas, farm to market roads, solar irrigation, logistics, and easy access credit. Those are the areas we are asking funds for,” Piñol told reporters.

Piñol last year had proposed to Finance Secretary Carlos Dominguez and Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla the bond flotation to fund the backlog of 13,000 kilometers of FMRs, as well as its farm modernization program.

Under the proposal, Piñol recommended that the government float bonds to private and commercial banks to finance the construction and completion of critical farm to market roads which would connect food and agricultural production areas to the national highways and later railway loading depots en route to the market.

Piñol said they are still waiting for the reply of National Treasurer Rosalia de Leon.

“When I referred this to Secretary Dominguez, last year, he advised me to write the national treasurer. So since the national treasurer is under the DOF, I would assume that they are already talking about this,” Piñol said.

Piñol earlier said Dominguez and Espenilla welcomed the bond float proposal and said the measure would utilize the vast resources of private and commercial banks which are required by law to lend 25 percent of their loan funds to the agriculture and fisheries sectors.

Under the Agri-Agra Reform Credit Act of 2009 or the Agri-Agra Law, private and commercial banks are required to earmark 25 percent of their loan funds for projects in the agriculture and fisheries sectors.

However, over the years, banks have opted to pay the hefty fines for their failure to comply with the law rather than lend to the agriculture and fisheries sector which they consider as ‘high risk’ borrowers, according to Piñol.

“It should be a win-win proposition since bond proceeds will go to the agri-agra sector development and banks will have another channel to deploy their funds prudently while complying with mandatory credit allocation requirements. We are awaiting details of the proposal,” Espenilla earlier said.

Piñol previously said around P140 billion is needed over the next four years to finance road network construction which is expected to lower the cost of basic commodities.

Another P60 billion in bonds may be floated for DA’s mechanization program which will involve the acquisition of farm machinery and equipment and post-harvest facilities.