Senator Aquino urges three-month interest holiday on gov't loans amid El Niño threat

MANILA – Senator Bam Aquino on Tuesday proposed a three-month suspension of interest charges on government loans beginning January 2027 to cushion small businesses, online sellers, and workers against the anticipated economic impact of a potentially severe El Niño.

Aquino said the proposed relief, covering January to March 2027, would give borrowers more financial breathing room as prolonged dry conditions threaten to drive up food prices, electricity costs, and other household expenses.

“Malaking tulong sa maaapektuhang sektor kung hindi muna papatawan ng interest ng gobyerno ang kanilang mga pautang hanggang sa bumalik sa normal ang sitwasyon (It would greatly help affected sectors if the government temporarily stopped charging interest on their loans until conditions return to normal),” Aquino said in a news release.

The senator identified the Small Business Corporation (SB Corp), Social Security System (SSS), Government Service Insurance System (GSIS), and Home Development Mutual Fund (Pag-IBIG Fund) as institutions that could extend temporary relief to qualified borrowers.

Aquino, who chairs the Senate Committee on Trade, Commerce, and Entrepreneurship, said suspending interest charges could help micro, small, and medium enterprises (MSMEs) preserve working capital, sustain operations, and protect jobs despite rising business expenses.

The proposal comes as the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) warns that the ongoing El Niño could intensify into a very strong event before the end of 2026 and persist through the first half of 2027.

In its Sept. 23 climate advisory, PAGASA cautioned government agencies and climate-sensitive sectors to prepare for below-normal rainfall, dry spells, and drought that could affect agricultural production and water availability.

The threat is particularly pronounced in Central Visayas, where PAGASA has identified Cebu and Bohol among provinces that could experience drought by March 2027 if below-normal rainfall persists.

SB Corp currently offers several financing programs with varying interest rates, including loans carrying 8 percent to 12 percent annual interest and facilities charging 1 percent monthly on diminishing balances.

Some programs already provide interest-free periods, including business expansion and enterprise rehabilitation loans that charge no interest during their first year.

Aquino's proposal would extend temporary relief to borrowers facing interest charges during the projected peak of the weather disturbance.

“Magkakaroon ng kailangang espasyo ang ating maliliit na negosyo para mapanatili ang kanilang operasyon at maprotektahan ang kabuhayan ng kanilang mga manggagawa sa gitna ng inaasahang pagtaas ng presyo ng bilihin (Our small businesses will have the necessary breathing room to sustain operations and protect their workers' livelihoods amid the expected rise in commodity prices),” he said.

Beyond entrepreneurs, Aquino said ordinary workers and middle-income families could also benefit from reduced loan expenses, allowing them to allocate more of their income to food, utilities, and other necessities.

The senator earlier requested Senate President Sherwin Gatchalian to reconvene the Proactive Response and Oversight for Timely and Effective Crisis Strategy (PROTECT) Committee to coordinate government preparations for El Niño.

The Senate created the committee under Resolution No. 45 on March 18, initially to examine the government's contingency measures against the economic and energy-related consequences of the Middle East conflict.

The panel subsequently conducted hearings on March 24 and 26 to assess the crisis and identify measures to protect the Philippine economy.

Aquino said the same coordinated approach should now be applied to the impending climate emergency, particularly in protecting agriculture, food security, education, public health, livelihoods, and essential services.

He emphasized that government preparations must go beyond responding to drought and include measures to shield families and businesses from its economic consequences. (PNA)