Manila’s Central Bank approves $100-M loan for agrarian reform

MANILA, Philippines – The Central Bank of the Philippines has approved a $100 million loan from the Asian Development Bank (ADB) and the Organization of Petroleum Exporting Countries (Opec) in support of the government’s agrarian reform program, a ranking bank official revealed.

Diwa Gunigundo, the bank’s deputy governor, said the approval paves the way for the eventual release of the funds for Phase 2 of a project which aims to benefit members and encourage the establishment of more Agrarian Reform Communities (ARCs) in the country.

Phase 2 will cover 32 provinces in 14 regions throughout the Philippines, Gunigundo reported.

Experts acknowledge that ARCs constitute the bright spots in the otherwise bleak landscape that is the country’s implementation of the government’s Comprehensive Agrarian Reform Program (Carp).to enable farmers to own the land they till in order to improve their lives.

Carp was to have lapsed in December 2008 but the House of Representatives and the Senate passed a joint resolution for its temporary extension in 2009 when Congress is to pass a law officially extending its life for another five years.

As the name implies, ARCs refer to neighboring or adjoining communities composed of land reform beneficiaries who have organized themselves into cooperatives to enable them to secure government assistance and implement projects for their common good, like marketing of their products.

Gunigundo said that of the $100 million loan, the Manila-based ADB will provide $70 million and the remaining $30 million will come from Opec.

Gunigundo said the ADB loan will have a 25-year repayment period, including a grace period of five years and an interest rate based on the ADB London interbank offered rate-based lending facility.

On the other hand, the Opec loan will have a 20-year maturity, with a five-year grace period, a one percent service charge and a three percent interest rate, he added.

According to Gunigundo, the project will help train land reform beneficiaries participate in infrastructure programs and agribusiness activities.

The project, the bank official said, will also target capacity-building for agrarian reform organizations, improve rural infrastructure and distribution networks, such as farm-to-market roads, bridges, small-scale irrigation systems and post-harvest facilities.

At the same time, Gunigundo said the project will also provide technology and extension support to assist ARC members increase productivity of their crops as well as encourage them to partner with microfinance institutions and non-government organizations to develop new agriculture-based enterprises and markets.

Phase 1 of the project, which started in 1998, assisted 165 ARCs in 35 provinces and has proven to be a valuable tool in improving the lives of the land reform beneficiaries who would otherwise have been left to fend for themselves, Gunigundo explained.

He said the $100 million loan forms part of the national government’s official development assistance (ODA) borrowing for 2009 which is expected to reach $1 billion.

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