Landbank finalizing guidelines for interest rate subsidy

MANILA, Philippines — State-run Land Bank of the Philippines (Landbank) is set to finalize this week the guidelines for its interest rate subsidy to local government units (LGUs), after the Department of Finance (DOF) gave its approval for the key features of the program.

In a text message to The STAR, Landbank president and chief executive officer Cecilia Borromeo said the DOF had already approved the general guidelines for the interest rate subsidy provisions under the Bayanihan to Recover as One Act or Bayanihan 2.

However,  Landbank declined to disclose the details of the program as they would still need the approval of the respective board of directors of the two participating banks.

In a phone interview, Landbank assistant vice president for Corporate Affairs Vivian Cañonero said the implementing rules and regulations are expected to be discussed by the bank’s board this week.

“The DOF already approved the salient features, but our board would have to go through the details further, like how much can each LGU borrow, things like that,” Cañonero said, adding that “the respective banks will have to release the details of the guidelines.”

The STAR tried to get the status of the guidelines from the Development Bank of the Philippines (DBP), but as of press time, it has not  yet responded  to the inquiry.

Cañonero said the salient features of the program would be the same for Landbank and DBP, as agreed upon by the two banks.

Under Republic Act 11494 or the Bayanihan 2 Law, Landbank and DBP were allotted P1 billion each to provide interest subsidy for new and existing loans secured by LGUs.

This aims to provide relief to local governments and to support their respective recovery efforts following the damage caused by the coronavirus pandemic and the lockdown imposed in different parts of the country.

According to the Department of Budget and Management (DBM), the allocations for the program have already been released to the two banks on Oct. 29.

Earlier, Borromeo 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 can be covered would still depend on the rate of subsidy.

Currently, Landbank is offering loans to pandemic-hit LGUs under the Restoration and Invigoration Package for a Self-Sufficient Economy Toward Upgrowth for LGUs or RISE UP LGUs program.

The program was provided an initial fund of P10 billion, before it was increased to P20 billion to support provincial, city and municipal LGUs in the implementation of their local economic recovery plans.

The DBP, for its part, has committed to provide funding support to stimulate the local economy and to enable LGUs improve the delivery of basic social services given the ongoing coronavirus pandemic.

The bank has its Rehabilitation Support Program on Severe Events (RESPONSE) program, which is designed to extend financing support for the recovery efforts of both public and private firms adversely affected by calamities, such as the ongoing health crisis.