Senate resolution seeks investigation on EO 558. Check it out:
(Business World (Philippines) Via Thomson Dialog NewsEdge) Senate economic affairs and trade committee chairman Manuel A. Roxas II filed a resolution last Sept. 18 that urged the banks and economic affairs committees to investigate an executive order (EO) that re-allows direct micro-enterprise lending by government non-financial agencies (GNFAs) and government-owned and -controlled corporations (GOCCs), thereby threatening to distort the country's microfinance market.
Malacanang earlier issued EO 558, which effectively repealed EO 138 issued in 1999 by then President Joseph E. Estrada, and re-allowed GNFAs and GOCCs to subsidize credit programs, which the Estrada order limited to government financial institutions. The halt in direct lending is believed to have encouraged private financial lending and the growth of microfinance in the country.
Also, international funding institutions like the International Monetary Fund, World Bank, and the Asian Development Bank have warned of the possible impact of EO 558, noting that GOCCs and GNFAs are ill-equipped for this task, including in collecting loans.
But the Palace had defended the move, arguing that the poor had no access to credit programs in private financial institutions.
"Failure to reach the intended beneficiaries, misallocation of resources, fiscal hemorrhage, and damp [sic] economic growth are some of the ills of direct credit," a statement yesterday quoted Mr. Roxas as saying.
"Instead of repealing EO 138, there is a need to assess current lending and livelihood programs and to reconcile all existing laws to effectively establish an environment responsive to small and medium enterprises' [SMEs] problems," he added.
He said the government should not junk "tried-and-tested" policies to improve SME credit and financing. Mr. Roxas noted that SMEs account for over 99.6% of the country's registered companies, generating about 69.1% of the country's total employment. "SMEs are indispensable to the country's overall economic growth. We have to push for their development by improving their access to financing through credit guidelines and programs," he said.
Sen. Richard J. Gordon, chairman of the committee on government corporations, earlier said he would also file a resolution to investigate EO 558 amid suspicions that the system could be used to channel funds for next year's elections.
Copyright 2006 BusinessWorld (Philippines). Source: Financial Times Information Limited - Asia Intelligence Wire.
Technorati
Del.icio.us
Slashdot
Digg
