MODULE 10

CENTRAL BANKING FOR SOCIO-ECONOMIC DEVELOPMENT

After this lesson, the reader must be able to comprehend and demonstrate mastery of the
following:

1. The Right to Development

2. Two Different Worlds
3. The Promotion of Human Dignity
4. Deprivation of the Rural Poor
5. The Miseries of the Urban Poor
6. The Social Responsibility of Central bank

The Right to Development

Development is a dynamic process which involves the interaction among various economic,
social, cultural, political, and religious factors.

For a poor country, development - "It means a sustained effort at the elimination of hunger,
disease, ignorance, injustice, and inequity".

It is not only concerned with economic development but also the promotion of human dignity.

International Conference on Human Needs declared: "The satisfaction of human needs is indeed
the whole purpose of growth, trade and investments, development assistance, the world food
system, population policy, energy planning, commodity stabilization, ocean management,
environment protection, monetary reform, and arms control".

The president of Senegal Supreme Court, Keba Mbaye said: "The right to development is a
human right because man cannot exist without development".

Two Different Worlds

 We live in two different worlds. One for the rich and another for the poor. In the world of
rich, they are busy in pursuing their higher needs while on the latter, there is widespread
hunger, disease, and ignorance.
 In fact, 40,000 children die every day due to malnutrition. And yet the world has the
resources to feed them.

The Promotion of Human Dignity

Development is primarily concerned with the promotion of human dignity.

This is the priceless gift of God to man. Without human dignity, man is no better than an animal.
In addition, the United Nations declares:

1. The aim of development should be the constant improvement of the well-being of the peoples
on the basis of their full participation in the process of development and a fair distribution of its
benefits.

2. Each country has the right and responsibility to choose its means and goals of development
such as the implementation of progressive economic and social reforms.

3. All the countries have the duty and, individually and collectively, to cooperate in removing the
obstacles that hinder the mobilization and utilization of resources.

The UNESCO Director-General has stated:

"The social reality of development is something much more than material well-being. Human
Dignity is at least as important a part of it as happiness, and that dignity is meaningless except in
relation to those values which make life worth living and of which culture is both custodian and
the critic, the repository and the originator".

Deprivation of the Rural Poor

 The roots of poverty are the rural areas. The poorest of the poor are found in such places.
Hoping against hope, they go to the cities for possible better life. This influx of rural poor
to the urban centers has created slums and squalor. Not a few of the live under the bridges
and along river banks.
 In urban societies of the world, the poorest of the poor called "boat people" of
Agriculture. They have no lands of their own. They live in their small boats. They also
use their boats as the principal source of their livelihood.

The Miseries of the Urban Poor

Urbanization is a symbol of economic growth. However this is only for developed countries.

Extreme rural poverty has forced the people of the villages to move into the cities in the hope of
improving their economic conditions.

The Jobs of Central Banking

 As the central monetary authority, the Bangko Sentral ng Pilipinas does not only control
the volume of the money but also the allocation of available credit facilities.
  The main focus of the economic recovery is on the development of agriculture and
country side.
 The Bangko Sentral extends loans either from domestic or foreign sources - to the
government for its various socio-economic programs and projects.

Rural Development Programs and Projects

 Rural development is primarily concerned with optimum utilization resources - human,

economic, social, and physical - in a given area through a systematic manner based on
self-reliance.
 Many of our major rural development program and projects have been funded by the
United States, Japan, Australia, and other rich countries. These include roads, bridges,
irrigation, electrification, water supply. Communication, health and school facilities.
 The World Bank and the Asian Development Bank have granted substantial loans for our
rural development which is the main focus of their development assistance program.

Housing the Urban Poor

 Most families live in rooms and apartments which are unfit for human habitation.
Because of the law of supply and demand, rentals for bed spaces rooms and apartments
have greatly escalated. Those who cannot afford to pay put up their shanties along river
banks, railroads and seashores. Others erected their makeshift houses in vacant public
lots. The poorest groups sleep in Rizal Park, under the bridges and in underpass.

Housing Program of the Government

 Our urban development program - which is primarily a housing program - is largely

funded by the World Bank. Nevertheless, the Bangko Sentral can also participate in the
housing program for the poor by extending soft loans for housing projects through the
government and the banking system.
 The urban poor can avail of such housing credit facilities to be able to own their houses
and lots on very easy installment scheme.

Concepts approaches in sheltering the urban poor:

 1. Housing is seen as a whole process of development embracing all the needs important
to man, his community and the place he lives in;

 2.Majority of the housing programs must be for the poor since they hav the largest need
for decent shelter and deserve government assistance;

 3. The residents must actively participate in improvement of their communities;

  4. Housing benefits, designs, and costs are planned according to the ability to pay of
residents;

 5. Investments must be recovered either directly from beneficiaries or indirectly from

other sources to sustain the efforts of the government to provide shelter to the urban poor;

 6. Housing is the concern of everybody, thus every sector of society must contribute to
the solution of the housing problem;

 7. All agencies of the government, both local and national, must participate in the total
housing program; and

 8. Private resources, must be mobilized to satisfy the housing need.

The Social Responsibility of Central bank

 The main function of central banking is the management of money. The proper
management of money can lead to price stability, more jobs and better economic growth.
With the vast resources and powers of the central bank of any country, it can greatly
influence the direction of the financial system towards the attainment of major economic
goals.
 A central bank must not only pursue price stability and economic growth if these do not
touch the lives of the poor masses. Price stability is useless if most of the people are
jobless. Economic growth is meaningless if the fruits of development do not seep down
to the level of the poorest of the poor.
 Credit is the key factor in accelerating rural development. It provides funds for
productive projects that can create products, jobs and incomes for the rural poor.
 According to Dr. Ernest Feder, the credit system of the less developed countries has not
been designed for the poor.
 Senator Alberto Romulo said that before bankers that banks funnel their resources which
are generated from rural savings to urban projects which do not benefit the poor.
 Social Contract of Rosseau - Each institution - individual, social, political and economic -
depends on one another. Such interdependence requires unity and cooperation which are
vital to the growth of whole.
 Central banking must help blaze the path towards the attainment of social justice. This is
the only way for man to lie with human dignity.
 The central bank of any country has the social responsibility to help themselves. It should
actively participate in eliminating or reducing poverty, ignorance, disease and injustice.
 Economic abundance and modern technology become only meaning if these touch the
lives of the poorest of the poor. So, it can be said that there is social justice. This is the
only way for man to live with human dignity.