Senator Sherwin Gatchalian (Senate PRIB)
MANILA, Philippines — Senator Sherwin Gatchalian has some creative ideas for the Land Bank of the Philippines’ P1.3 trillion worth of investable funds.
He believes that instead of letting it collect dust, the money should go towards helping the agricultural sector.
During the Senate committee on banks, financial institutions, and currencies hearing on the Maharlika Investment Fund bill on Wednesday, Gatchalian highlighted the need for investment in the agricultural sector, saying that the P1.3 trillion currently lying around should be lent to those working in the agricultural sector.
“I’m not happy to hear that there’s this much funds in a bank, considering that the GFIs (government financial institutions) are geared towards a specific mandate: Land Bank for agriculture, DBP (Development Bank of the Philippines) for developmental projects. They’re not commercial banks that the board has the discretion to leave ‘x’ amounts,” he said.
“These banks were created for a specific reason, for Land Bank, it’s agriculture. So, I’m actually not impressed to hear that there is P1.5 trillion lying around, not being lent to our agriculture sector. We all know that our agriculture sector needs investment. Consolidating land, lending out to farmers, modernizing needs a lot of capital,” he pointed out.
In response, LBP president and chief executive officer Cecilia Borromeo said that the assets of the bank are “mainly driven by deposits, most of which are short-term.”
She explained that the funds are being managed in a way where a portion is allotted for long-term loans and for working capital requirements.
“We don’t lend yet because there is also an issue about the absorptive capacity of some of the sectors that we prioritize like the agri sector,” Borromeo said.
“While we are also working very hard in increasing the absorptive capacity of the agri sector, the reality is that there are so many challenges and most of the players in the agri-business value chain are actually not yet ready to be funded by credit,” she continued.
Borromeo added that the loan portfolio of the LBP has been “increasing more rapidly than the growth” of the agricultural sector.
“Our loan portfolio to the agri sector as of end of 2022 was P261 billion, the highest probably in the industry,” she said.
Under the bill, the LBP, along with the DBP and dividends from the Bangko Sentral ng Pilipinas will provide seed capital for the Maharlika Investment Fund. (with MJ Soriano, INQUIRER.net trainee)