By: Michelle V. Remo
Philippine Daily Inquirer
1:24 am | Saturday, March 3rd, 2012
The Bangko Sentral ng Pilipinas has announced the creation of a new
credit surety fund (CSF) to boost micro small and medium enterprises
(MSMEs) in the country.
With the establishment of CSFs, low-income traders will get as much
chance as the high-income ones to expand their businesses and increase
their profits, the central bank said.
CSF is a pool of money contributed by cooperatives, local government
units, state-owned banks, and other entities, which will serve as
collateral for MSMEs trying to secure bank loans.
The BSP will take the lead in organizing CSFs in various parts of the
country.
According to the regulator, MSMEs usually find it difficult to secure
bank loans because most lack assets that can serve as collateral. CSF
will ease an MSME's access to bank loans.
The CSF in Capiz will be formally launched on March 7. This is the 21st
CSF in the country.
The central bank said it would spearhead the creation of more CSFs over
the short term to spur economic activities in the countryside.
"The CSF program is expected to increase lending activities, as well as
stimulate business and economic activities, generate employment, and
increase the local government's revenues," the BSP said in the statement.
MSMEs account for over 90 percent of enterprises in the country. They
also account for over 70 percent of employment.
Their problem on access to bank loans, however, was cited as a major
hindrance to the development of that sector.
The improved access to loans and other financial services in the country
is one of the key measures that the BSP believes will be crucial to
achieving "inclusive" economic growth.
Developmental institutions, including the World Bank and the Asian
Development Bank, have urged the Philippine government to strive for
inclusive growth—one that benefits even the low-income sector.
This, they said, would be vital in reducing poverty specially in the
countryside.
The developmental institutions credited the Philippines for maintaining
a steady pace of economic growth over the years, even during the height
of the global economic crisis in 2009. But they have also aired their
concern that growth in the country has not trickled down to the
low-income groups.
Poverty incidence in the Philippines, as of 2009, stood at 26.5 percent
of the country's population, according to the latest statistics.
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