MICROCAPITAL STORY: Philippine Government: $1.9b Available for Microfinance

The chief of staff of Philippine President Gloria Macapagal-Arroyo has said that the nation’s government has PHP 80 billion (USD 1.9 billion) available for microfinance programs and is looking for partners to help disperse the funds.

The source of the funds and the nature of partners being sought are not immediately clear from the statements by Cerge Remonde.

Remonde, in a discussion with local organization Citizens Movement for Good Government in the Visayas region, added that the administration is committed to providing three million entrepreneurs with sufficient credit to create six to ten million jobs in the Philippines by 2010.

To facilitate microfinance in the country, President Macapagal-Arroyo has already been able to encourage a decrease in microfinance interest rates from 12 to 10 percent, according to the provisions of the General Banking Act of 2000. MicroCapital reported in February that the government was directing microfinance institutions to look into lowering interest rates for their borrowers.

Remonde said that since 2004, the government has disbursed PHP 232.8 billion (USD 5.5 billion) to 3.8 million microfinance clients via local microfinance institutions and organizations, resulting in 2.2 million new jobs. Repayment rates have been 98 percent, with 92 percent of borrowers being women.

MicroCapital’s recent coverage of microfinance in the Philippines includes a study by the Mindanao Microfinance Council on the benefits of microfinance to its beneficiaries in April, a USD 1 million grant to the Philippine government for microinsurance by the Japan Fund for Poverty Reduction in March, a microfinance housing product rolled out by the Philippine central bank in March, and a USD 34 million line of credit received by Producers Rural Banking Corporation for microfinance activities in February.

By Stephen Son

Additional Resources:

Oanda: FX Converter

Philippine Daily Inquirer: “Gov’t has P80B for microfinancing”

MicroCapital.org article, February 14, 2008: “Philippine Government Advocates Lowering Interest Rates for Microenterprises”

MicroCapital.org article, April 28, 2008: “Mindanao Microfinance Council Looks to Conduct Study on Microfinance Penetration and Benefits in the Region”

MicroCapital.org article, March 25, 2008: “Asian Development Bank and Japan Fund for Poverty Reduction Provide USD 1 Million Grant to the Philippines for Microinsurance”

MicroCapital.org article, March 4, 2008: “Bangko Sentral ng Pilipinas (BSP), in Agreement with Housing and Urban Development Coordinating Council (HUDCC), Rolls Out New Housing Mircofinance Product for the Economically Active Poor”

MicroCapital.org article, February 28, 2008: “Producers Rural Banking Corporation (PRBC) Receives $34m Credit Line for Microfinance Activities in the Philippines”