RP to reject $175-M loan if ADB insists on NFA sale

The government said it will reject the second and third tranches of the Asian Development Bank’s (ADB) $175-million Grain Sector Development Program loan if the bank insists on privatizing the National Food Authority (NFA).

"We have submitted to the ADB our maximum positions but and if the bank is unwilling to abide by these, we have no choice but to forego the loan," said NFA Deputy Administrator Gregorio Tan.

Tan said NFA submitted its position to the ADB about four weeks ago and expects a response shortly.

The GSDP consists of a $100-million program loan and a $75-million investment loan intended to bankroll government efforts to improve infrastructure and support services for the local rice and corn industry.

The first tranche consisting of $30 million was released in April 2000 but subsequent disbursements were delayed because of the impasse in negotiations. The release of the second tranche ($40 million) is a year delayed. The third tranche is $30 million.

The ADB cited issues such as the privatization of the NFA, removal of NFA’s price incentive in buying palay, and private sector participation in the importation of rice as prerequisites.

"Privatization of the NFA is not something that we are willing to give," insisted Tan.

Aside from the ticklish issue of NFA privatization, the ADB has put off the release of the second and third tranches of the loan because of what it alleged as government’s failure to provide vital information to ADB.

The information includes regional statistics on distribution and payments as well as the amount of incentives given to cooperatives.

The ADB also wants NFA to remove the quantitative restrictions on rice importation as well as to remove the P0.50 per kilo incentive provided to farmers for selling their stocks to the NFA.

Tan said however, that NFA wants to maintain its current support price of P9 to P10 per kilo for palay as well as go on providing the P0.50 per kilo incentive for prioritizing the selling of their palay to the grains-trading agency.

"The ADB’s proposal is to come up with a formula that effectively results in the lowering of subsidies for rice farmers, we insisted that we cannot agrees to such," said Tan. – Rocel Felix