Press Releases

“More water with the stroke of a pen:” Salceda thanks Medalla for clarifying that rural infra projects of water districts qualify as Agri-Agra loans; Medalla response to Salceda letter unlocks 852 billion in funds for water projects, will help solve water crisis

June 15th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) thanked Bangko Sentral ng Pilipinas Governor Felipe Medalla for officially clarifying that “financing of water and sanitation projects in rural communities” qualifies as a project financeable with Agri-Agra Rural Credit funds under the country’s banking system. This, based on the BSP’s March 2022 estimates, allows local water districts access to some P852 billion in loanable funds from banks.

“With just one letter, Gov. Philip [Medalla] makes available P852 billion for rural water services. That could be gamechanging. And what a great parting gift to rural communities as he ends his term in the BSP. Thank you, Governor Medalla,” Salceda said.

In a letter responding to Salceda’s request for clarification about the eligibility of water districts for Agri-Agra loans, Medalla responded that “the BSP will include this clarification in the set of frequently asked questions on the implementation of RA 11901.”

In the same BSP letter dated June 9, 2023, Medalla also clarified that “in addition to the loans for construction and upgrading of public rural infrastructure … loans or investments in debt/equity securities for the purpose of financing water and sanitation projects for rural communities may be considered as compliance with AFRD financing.”

“That’s very promising. When we get to the point that local water districts issue bonds for their rural water and sanitation projects, subscribing to those bonds will be considered compliance with the Agri-Agra Law,” Salceda said.

Under RA 11901, all banks are required to set aside a credit quota, or a minimum mandatory agricultural and fisheries financing requirement of at least twenty-five percent (25%) of their total loanable funds. Otherwise, penalties on noncompliance or undercompliance shall be computed at one-half of one percent (0.5%) of noncompliance or undercompliance, or at rates prescribed by the BSP Monetary Board. Banks incur around P2 billion in penalties every year for non-compliance with the law.

Pronouncement to “help solve water crisis”

Earlier this year, President Marcos made pronouncements that there exists a “water crisis” in the country. Salceda attributes much of this “to the unmitigated and lazy use of groundwater resources which we will eventually deplete.”

“We have not developed surface water. We have not made much progress in connecting rural communities with surface water. Of course, the result is depletion of groundwater resources – which are, by the way, also more prone to diseases such as cholera.”

“That is because these investments can be expensive, and financing, until this clarification, was limited. Water districts have raised issues about not being able to borrow from banks. The water districts themselves are not “rural beneficiaries” so that creates some confusion about whether their projects for rural water services are included under the Agriculture, Fisheries, and Rural Development Financing Law, or the amended Agri-Agra Law”

“So, this letter, and the issuances that will spring forth as a result, augur very well for solving the water crisis in the country,” Salceda said.

“It’s water for millions, with the stroke of a pen. Thank you, Governor Medalla,” Salceda said.

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