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Credit Subsidy in Philippine Agriculture

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  • Casuga, Magdalena S.
  • Geron, Maria Piedad S.

Abstract

This study attempts to measure subsidies to agricultural credit in recent years and provides policy implications. It finds that credit policy has evolved, from provision of subsidized credit to one that is more market-oriented, focusing on providing access to credit to farmers while exposing them to market interest rates. Nevertheless, there remains a significant public outlay for credit largely through unintended default subsidy. It recommends that publicly supported credit be provided solely through competent government financial institutions under independent regulatory oversight, rather than through agencies (such as the Agricultural Credit Enhancement Fund) or through government-owned and controlled corporations (such as QUEDANCOR). Government may also need to invest in other support services that would attenuate agricultural risk and encourage greater private sector participation in agricultural lending.

Suggested Citation

  • Casuga, Magdalena S. & Geron, Maria Piedad S., 2012. "Credit Subsidy in Philippine Agriculture," Discussion Papers DP 2012-28, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:dpaper:dp_2012-28
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    File URL: https://www.pids.gov.ph/publication/discussion-papers/credit-subsidy-in-philippine-agriculture
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    References listed on IDEAS

    as
    1. Llanto, Gilberto M., 2004. "Rural Finance and Developments in Philippine Rural Financial Markets: Issues and Policy Research Challenges," Discussion Papers DP 2004-18, Philippine Institute for Development Studies.
    2. Emmanuel F. Esguerra, 1981. "An Assessment of the Masagana 99 Credit Subsidy as an Equity Measure," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 18(3&4), pages 168-191, September.
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      Keywords

      Philippines; credit subsidy; market-oriented policy; default risk; risk reduction;
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