Loan condonation a tough ‘balancing act’
MANILA, Philippines — A peasant group and lawmakers on Tuesday welcomed President Ferdinand Marcos Jr.’s plan to condone P58 billion in loans owed by more than 600,000 agrarian reform beneficiaries (ARBs), but they advised the government to balance this with the need for funds for its recovery program.
The Kilusan Para sa Tunay na Repormang Agraryo at Katarungang Panlipunan (Katarungan) said Marcos’ move was welcome, but it wasn’t enough to address the woes of thousands of land reform beneficiaries.
“This is short of saying that farmers have no capacity to pay,” Danny Carranza, secretary general of Katarungan, said in a statement.
This could have more meaning “if he [Marcos] declared that land distribution will henceforth be free from amortization,” he added. “After all, farmers are practically not paying the amortization because of their failure to earn enough.”
In his first State of the Nation Address on Monday, Marcos urged Congress to pass a law to amend the Comprehensive Agrarian Reform Law of 1988, or Republic Act No. 6657, to condone the unpaid amortization and interests of ARBs’ loans.
The condonation will cover P58.125 billion owed by around 654,000 ARBs and involves a total of 1.18 million hectares of awarded lands.
Currently, only 17 percent of ARBs are paying amortization, resulting in massive loan defaults.
Since ARBs could not make payments, the lands sometimes just lie idle. Debt condonation would help them to finally obtain clean titles and sell the lands.
“For a genuine agrarian reform program and for the benefit of agrarian reform beneficiaries, the condonation of unpaid amortizations is welcome,” Albay Rep. Edcel Lagman said in a statement to the Inquirer.
But he added that this would cost the government P58.125 billion in forfeited amortization payments from ARBs, an amount that the government has advanced to the landowners “at a time when funding is urgently necessary for the government’s economic recovery program.’’
“Consequently, the government needs to make a thorough balancing act,” he said.
Albay Rep. Joey Salceda agreed with the President’s directive on loan condonation.
“These are basically zombie loans—no longer practically collectible, but they hold these lands down from being used more productively,” Salceda said.
—WITH A REPORT FROM INQUIRER RESEARCH