Landbank extends P51.3 billion loans to LGUs

MANILA, Philippines — State-run Land Bank of the Philippines has extended P51.3 billion in loans to local government units (LGUs) as of end-September this year, benefiting 639 cities, provinces and municipalities.

Landbank president and chief executive officer Cecilia Borromeo said part of this amount was made available through the bank’s Restoration and Invigoration package for a Self-sufficient Economy towards UPgrowth for LGUs (RISE UP LGUs) lending program, which was launched in July.

The program was provided an initial fund of P10 billion before it was increased to P20 billion to support LGUs in the implementation of their local economic recovery plans in light of the coronavirus disease 2019 (COVID-19) pandemic.

Under the program, LGUs may borrow an amount depending on their project requirements, provided that their loan exposure is not more than their net borrowing capacity, as certified by the Bureau of Local Government Finance.

Borromeo encouraged LGUs to tap Landbank’s credit facility to take advantage of low interest rates, made possible by the interest rate subsidy under Republic Act 11494 or the Bayanihan to Recover as One Act.

The law provides the bank with a P1 billion fund to subsidize the interest payments of new and existing loans secured by LGUs. Another P1 billion is allocated to the Development Bank of the Philippines for the same purpose.

“This is a very good time for the LGUs to consider accessing the credit facilities or the lending programs of the GFIs (government financial institutions), because we are now experiencing a very low interest rate regime,” Borromeo said.

Borromeo earlier said the P2-billion allocation for the interest rate subsidy under the Bayanihan 2 law would enable the two state-run banks to subsidize the interest payments of P50 billion worth of loans.

However, she said the amount of loans that could be covered would still depend on the rate of subsidy.

Aside from extending loans, Borromeo said Landbank also serves as the primary depository bank of LGUs, with 81 provinces, 146 cities and 1,478 out of the 1,488 municipalities maintaining deposit accounts with Landbank.

Borromeo said the bank is working to include the 10 remaining municipalities in the Landbank system by the end of the year.

She said the bank also provides digital payment solutions to help LGUs improve their collection performance.

As of end-September this year, a total of P226.7 million in real property taxes, real estate taxes and business permit payments were collected by 126 LGUs through the Landbank Electronic Payment Portal and Express Payment System.