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State-owned Development Bank of the Philippines (DBP) is set to implement the interest rate subsidy program covering loans for local government units (LGUs) that would be utilized for economic and social development projects that seek to mitigate the crippling effects of the pandemic, a top official said.
DBP President and Chief Executive Officer Emmanuel G. Herbosa said that DBP, along with Land Bank of the Philippines, has been allotted P1-billion each under Bayanihan 2 to provide subsidies on loan interest payments on new and existing loans of LGUs as they implement their respective COVID-19 response and recovery efforts.
“DBP recognizes that LGUs are the fulcrum of countrywide development,” Herbosa said. “We are one with them in implementing responsive actions that would hasten COVID-19 response and recovery efforts despite prevailing challenges.”
DBP is the seventh largest bank in the country in terms of assets and provides credit support to four strategic sectors of the economy – infrastructure and logistics; micro, small and medium enterprises; social services and community development; and the environment.
These four strategic sectors will be covered under the DBP Assistance for Economic and Social Development (ASENSO) for Local Government Units (LGUs) Financing Program, the bank’s banner program which supports the LGUs’ initiatives on market infrastructure development and improvement, social welfare, health care, and other public infrastructure projects that spur local economic activity. It will also serve as the main platform to implement the interest subsidy program of the National Government.
Funding for the Interest Subsidy Fund is an integral part of Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan 2) which was signed into law by President Rodrigo R. Duterte last September.
Herbosa said with the release of stimulus funds under Bayanihan 2, the bank could offer LGUs longer repayment terms of up to 15 years and at a lower interest of 4% per annum, half of which will be subsidized by the National Government’s stimulus funds until December 31, 2022.
He said the grant of the subsidy would be on a “first-come, first-serve basis” with the interest rate subsidy cap computed based on the approved loan amount or a P10-million cap for provincial and city LGUs, and P5-million cap for municipalities.
“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,” Herbosa said.