Executive Order No. 138

The year 1999 was a milestone in so far as Government's efforts to provide an efficient and effective credit delivery system to the disadvantaged sectors of the country are concerned. In line with its mandate, the National Credit Council, as chaired by the DOF, spearheaded the campaign toward the rationalization of all government directed-credit programs. This resulted in the issuance by the President on August 10, 1999, of Executive Order No. 138 directing all government entities involved in the implementation of credit programs to adopt the credit policy guidelines formulated by the NCC. The EO is anchored on the following basic policy principles:

• Greater role of the private sector in the provision of financial services to the basic sectors;
• Adoption of market-oriented financial policies by leveling the playing field to encourage a competitive credit environment;
• Government to provide an enabling policy environment, critical support services and capability building services that will facilitate the increased participation of the private sector in the delivery of financial services; and
• Non-participation of Government non-financial agencies and government-owned or controlled corporations in the implementation of government credit programs.

The EO will complement and strengthen Congressional initiatives in credit rationalization with the passage of the Poverty Alleviation and, the Agriculture and Fisheries Modernization Acts (AFMA) in 1997. With the transfer of implementation and management of government credit programs from non-financial agencies to GFIs, a more efficient and effective credit services delivery system will be realized giving the disadvantaged sectors greater access to financial services. Government line agencies and GOCCs will now be able to focus more on the delivery of basic services (such as infrastructure, irrigation, health, post-harvest facilities, capability building and social preparation activities) to enhance the clientele's viability and bankability.

Operating Guidelines of EO 138

Following the issuance of the EO, the NCC Secretariat in coordination with the Credit Policy Improvement Program (CPIP), a technical assistance program funded by the USAID, drafted the Operating Guidelines. It specifies the necessary steps and procedures that will be undertaken to ensure smooth implementation of the EO and its compatibility with the implementation of the AFMA. Upon instructions of the President, extensive consultations on the draft Operating Guidelines were conducted through a series of regional consultation workshops starting in the last quarter of 1999. Those involved in the regional consultations were, among others, concerned government entities, private sector financial conduits including cooperatives and NGOs, and representatives from the basic sectors. Various meetings with key executive and legislative officials on the implementation of the EO were also conducted.

Microfinance

To continuously enhance the understanding and appreciation on the field of microfinance, the NCC-CPIP sponsored a study visit to selected microfinance institutions and superintendencies of banks and financial institutions in Guatemala, Peru and Bolivia. Participants included representatives from both the houses of Congress, NCC Members, USAID and CPIP last January 25 to Feb 6, 1999. A similar study visit was also conducted to selected cooperative regulatory institutions in the US, Bolivia and Guatemala. The groups were provided insights and lessons on the sustainable microfinance operations in the region particularly on the critical role of governments in providing an appropriate policy and regulatory environment for microfinance.

Review of Credit Related Projects

To ensure that new credit programs will be in line with the Government policies on credit, the Technical Board of the Investment Coordinating Committee (ICC) is now requiring NCC endorsement of proposed foreign loans and project proposals with credit component before it could be presented to the ICC Cabinet for final approval. In 1999, the NCC reviewed and endorsed seven (7) project proposals to the ICC for consideration and approval.

Technical Assistance and Advocacy Press Releases

Other activities of the NCC/CPIP in 1999 were focused in technical and advocacy work. Among these efforts were:

• The conduct of consultation workshops on the design and framework of the Agricultural Modernization Credit and Financing Program (AMCFP) as well as its operating guidelines;
• Workshops on the proposed amendments to the Cooperative Code and the Charter of the Cooperative Development;
• Workshops on the Review of the Regulatory Environment for Deposit Taking Cooperatives and the establishment of a standard chart accounts; and
• Attendance to regular meetings with, among others, Congress on the amendments to the General Banking Act; the Policy Advisory Group of the Microfinance Coalition for Standard, Board of Directors of the Foundation for Sustainable Society, Inc., and with the Steering Committee on the Review of Government Financial Institutions.
• A strategic planning workshop with the members of the NCC Executive Committee (ExCom) to review the NCC accomplishments in the previous year and plan the activities for 1999 was also conducted.