The move of the legislature to repeal the Agri-Agra Law will boost financing for the agricultural sector and benefit the economy in general, the Bangko Sentral ng Pilipinas (BSP) said Friday.
The BSP has commended both chambers of Congress for ratifying the Bicameral Conference Report on the conflicting provisions of Senate Bill No. 2494 and House Bill No. 6134, entitled “The Agriculture, Fisheries, and Rural Development Financing Enhancement Act of 2022.”
This measure repeals the Agri-Agra Law and is expected to unlock financing for the agricultural financing ecosystem and for rural community development requirements. The enrolled bill will soon be transmitted to Malacañang for the President’s signature.
“The BSP has long pushed for the repeal of Republic Act No. 10000 to make it more responsive to the financing needs of farmers, fisherfolk, and agri-based micro, small, and medium enterprises,” BSP Governor Benjamin Diokno said in a statement.
He said the measure adopts a holistic approach to private sector financing by recognizing that rural community beneficiaries are part of a wider social and economic support system.
Beyond extending credit, the repeal aims to further capacitate farmers and fisherfolk, modernize their operations, and integrate them into profitable domestic and export-oriented value chains.
“Expanding the available modes of compliance with requirements to finance the agricultural sector will promote funding for green finance projects, income-generating activities, and public infrastructure projects, to the benefit of the rural agrarian reform and agricultural sector,” Diokno said.
Among the key features of the bill are the removal of the distinction between the 10-percent agrarian reform and the 15-percent agricultural credit, which is expected to provide banks greater flexibility in providing credit to the agriculture and agrarian reform sectors based on their capabilities.
In addition, banks that reach out to agrarian reform beneficiaries and agrarian reform communities will be able to allocate the entire 25 percent mandatory credit quota to the said sector. It also sets a multiplier for credit provided to eligible borrowers under the law.
This is initially set at 10, as a form of incentive for banks to provide financing to the agrarian reform sector.
On the other hand, banks that are unable to directly lend to rural community beneficiaries may contribute through other means, such as
investing in debt and equity securities, undertaking agricultural value chain financing, and granting agri-business loans to fund agricultural and community-enhancing activities.
The measure also encourages funding toward environmentally sustainable projects that will help mitigate the impact of climate risk on the agricultural sector.
Diokno said the BSP remains committed to working closely with the Department of Agriculture, Department of Agrarian Reform, Department of Finance, Bureau of the Treasury, and relevant government agencies and stakeholders toward the effective implementation of this game-changing legislative measure.