The Asian Development Bank (ADB) approved Friday a $400-million (P20 billion) loan to the Philippines to help improve local governments’ capacity to deliver public services and generate revenue.
The bank said in a statement that the funding will support the second phase of the Local Governance Reform program for local government units (LGUs) to modernize their public financial management.
The program was implemented in anticipation of the devolution of functions to LGUs from the national government in response to the Supreme Court Mandanas ruling, which increase the share of LGUs of national taxes starting 2022.
LGUs are set to receive P1.116 trillion from the national budget next year and implement programs and projects that were devolved to them by the national government.
The ADB said the Bureau of Local Government Finance has established a property valuation office and a committee will monitor ongoing real property tax reform.
“Much is expected from LGUs, especially now, as they are at the forefront of public service delivery during the COVID-19 pandemic,” ADB Public Finance Economist for Southeast Asia Aekapol Chongvilaivan said.
“The reform program will help ensure local governments have the capacity and adequate resources to quickly respond to the basic needs of local communities at critical times like this,” he said.
The scope of financing for local development has also been expanded to include public–private partnership projects, according to the bank.
The ADB provided a $26.5-million loan last year to support the reform of the real property tax system for LGUs, and a $300-million loan in 2019 to help the government create a legal and institutional framework for LGU revenue.
The ADB aims to lend $3.9 billion to the Philippines this year. – Beatrice M. Laforga