STATE-RUN lender Development Bank of the Philippines (DBP) is set to roll out its interest rate subsidy program for the loans taken out by local government units (LGUs), but only those that can be serviced by the P1-billion budget will be accommodated, according to its chief.
In a statement on Thursday, DBP President and CEO Emmanuel G. Herbosa said the national government will subsidize half of the four-percent interest rate on LGU loans, but the amount of relief per provincial and city LGU is capped at P10 million and P5 million each for municipalities.
With a fixed P1-billion budget, “grant of the subsidy would be on a first-come, first-serve basis,” he said.
New and existing loans obtained under DBP Assistance for Economic and Social Development for LGUs Financing Program until Dec. 31, 2022 are qualified for the subsidy. Longer repayment terms of up to 15 years can also be offered under the program.
“DBP shall continue to work with the National Government in coming up with these types of interventions that would greatly benefit lower-tier LGUs, as they scale up social and economic interventions for their constituents and boost their resiliency against future economic downturns,” Mr. Herbosa was quoted as saying.
Republic Act No. 11494 or the Bayanihan to Recover as One Act allots P1 billion each to state-run banks DBP and Land Bank of the Philippines to provide interest subsidies to LGUs. The measure aims to encourage LGUs to tap credit facilities if they need additional financing for their recovery programs.
DBP was the ninth biggest bank in the country in terms of assets in 2019 with P761.5 billion. Its focus is extending credit financing for infrastructure and logistics; micro, small and medium enterprises; social services and community development; and the environment. — B.M. Laforga