Rural Finance in the Philippines: Lessons from the Past and Prospects from the Future

Joseph Y. Lim


The paper focuses on the relationship between overall macroeconomic policy and rural finance to cover the credit gap for agricultural production. Several laudable measures have been proposed by the Agricultural Credit Policy Council (ACPC), including intensifying rural savings mobilization, using CALF to guarantee agricultural loans from the financial sector, programs to increase agricultural productivity and support for credit cooperatives. These are being undermined, however, by macroeconomic policies such as 'tight' money, which restricts credit, restrictions on bank entry into rural areas, low savings deposit rates, lack of investments in rural infrastructure, stagnation in the implementation of agrarian reform, and a weak government bureaucracy in rural areas.

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