By Mia M. Gonzalez
Reporter
PRESIDENT Arroyo has issued Executive Order 558-A clarifying the overall framework in the implementation of government credit programs as "contemplated" under EO 558 dated August 8, 2006.
EO 558-A is supposed to reflect the inputs of Finance Secretary Margarito Teves, who earlier expressed concern over the possible adverse impact of the original executive issuance on private lending institutions and on government resources.
Credit programs under the auspices of EO 558 shall focus only on the municipalities and barangays identified by the People's Credit and Finance Corporation (PCFC) as "unserved areas" where there are no identified and available participating financial institutions (PFIs) like banks, cooperatives and nongovernment organizations.
EO 558-A also provides that "all other credit programs by government nonfinancial agencies (GNFAs) and government-owned and –controlled corporations (GOCCs) shall require specific approval by the President of the Philippines."
It said: "GNFAs and GOCCs are directed to continuously provide proactive support and technical assistance to enable micro and small enterprises to become viable and sustainable."
EO 558 repealed EO 138 issued during the Estrada administration, which limited direct lending to government financial institutions. The repeal drew fire because EO 138 had been hailed as a model in promoting market competition in microfinance, and ending the system that encouraged behest loans from state financial agencies.
EO 558 extended direct lending to GNFAs and GOCCs, fueling fears that it would deter private lending and hurt the fiscal health of government agencies with the resurgence of behest loans, prompting Mrs. Arroyo to issue the clarificatory EO which she signed a month after Teves submitted his recommendations.
Under EO 558-A, the Department of Social Welfare and Development shall immediately implement and provide the necessary credit assistance and other support services in the unserved areas.
The livelihood-support program to be provided by DSWD shall include social preparation and capacity-building activities such as business-development services to assist the targeted clientele to access financial assistance from GFIs at the soonest possible time.
The DSWD shall provide livelihood credits based on interest rates comparable to those charged by Quedancor, and "shall endeavor to simplify loan documentation and processes to ensure fast and timely approval of proposals and disbursement of proceeds."
The PCFC shall "continuously" exert all efforts in identifying and providing support to potential PFIs" that are interested and are willing to operate and provide the necessary financial services in the unserved areas".
It will also monitor DSWD's livelihood support program and submit periodic reports to the National Anti-Poverty Commission.
Business Mirror
November 23, 2006
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