Manila:Senator Bam Aquino has proposed a three-month suspension of interest charges on government loans starting January 2027 to help small businesses, online sellers, and workers cope with the anticipated economic impact of a potentially severe El Niño event.
According to Philippines News Agency, the proposed relief, which would be in place from January to March 2027, aims to provide financial breathing room for borrowers as extended dry conditions are expected to increase food prices, electricity costs, and other household expenses.
Aquino suggested that institutions such as the Small Business Corporation (SB Corp), Social Security System (SSS), Government Service Insurance System (GSIS), and Home Development Mutual Fund (Pag-IBIG Fund) could offer temporary relief to qualified borrowers. As chair of the Senate Committee on Trade, Commerce, and Entrepreneurship, Aquino noted that suspending interest charges could help micro, small, and medium enterprises (MSMEs) maintain working capital, sustain operations, and protect jobs despite rising business costs.
The proposal comes as the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) warns that the ongoing El Niño could strengthen significantly before the end of 2026 and continue through the first half of 2027. In its climate advisory, PAGASA urged government agencies and climate-sensitive sectors to prepare for reduced rainfall, dry spells, and drought conditions that could impact agriculture and water supply. The threat is particularly concerning for Central Visayas, with Cebu and Bohol identified as provinces that might face drought by March 2027 if the dry conditions persist.
Currently, SB Corp offers various financing programs with interest rates ranging from 8 to 12 percent annually, and some programs include interest-free periods for the first year. Aquino's proposal would extend relief to borrowers facing interest charges during the anticipated peak of the weather disturbance.
Aquino also highlighted that the interest holiday could benefit ordinary workers and middle-income families by reducing loan expenses, allowing them to allocate more income to essentials such as food and utilities. He has 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 PROTECT Committee, established under Senate Resolution No. 45, initially focused on examining the government's contingency measures regarding the economic and energy impacts of the Middle East conflict. Aquino emphasized that a coordinated approach is necessary to address the impending climate emergency, particularly in safeguarding agriculture, food security, education, public health, livelihoods, and essential services.
