PBBM declares moratorium on payment of land amortization and interests
The 65th birthday of President Ferdinand Marcos Jr. today marks the historic signing of an executive order, declaring a moratorium on payment of land amortization and interests.
The momentous signing of the executive order, held on Tuesday, September 13, 2022, would spare agrarian reform beneficiaries (ARBs) the burden of paying their annual amortization and interests while enabling them to use the money to purchase farm inputs and/or as starting capital for any business enterprises they may consider venturing into.
Agrarian Reform Secretary Conrado Estrella III led a delegation of 160 department officials, land reform beneficiaries, and advocates to witness in Malacañang Palace event.
Section 26 of the Republic Act 6657, the Comprehensive Agrarian Reform Law, states that “lands awarded pursuant to the law shall be paid for by the beneficiaries to the Land Bank of the Philippines in 30 annual amortizations at six percent interest per annum.”
Many agrarian reform beneficiaries and advocates have long been clamoring for the suspension of amortization payments and loan interests amid the many challenges that farmers face such as the pandemic, calamities, and rising cost of farm inputs.
In his first State of the Nation Address, President Marcos Jr. urged Congress to pass a law that will lift the burden off agrarian reform beneficiaries who have loan dues so that they could concentrate on farm productivity, a top priority of his administration.
“The condonation of the existing agrarian reform loan will cover the amount of P58.125 billion benefiting around 654,000 agrarian reform beneficiaries and involving a total of 1.18 million hectares of awarded lands,” Marcos was quoted as saying.
Agri Party-list Rep. Wilbert T. Lee already proposed a bill, seeking to free ARBs from their unpaid land reform amortization and interests.
The 2006 study commissioned by the DAR, “The Comprehensive Agrarian Reform Program: Scenarios and Options for Future Development,” it shows that pursuing payments for amortization and interests would not be beneficial to the government due to “high transaction costs.”
The said study says: “Administrative cost of setting up a system for collecting amortization payment from beneficiaries will be higher than the collectible amount.”
Another study conducted by the DAR-Policy and Strategic Research Service: “An Assessment of Payment of Land Amortization by ARBs,” it shows that of the total amount of arrearages for ARBs with deficient amortization payments, 43.6 percent constitute the principal and 56.4 percent the interests, a not promising scenario since “the interest arrearages has already exceeded the principal amount.”