The Asian Development Bank said Friday it approved a $400-million policy-based loan to the Philippines to help improve local governments’ capacity to provide high-quality public services, especially during the coronavirus disease pandemic.
It will fund the Local Governance Reform Program Subprogram 2, which is designed to help strengthen local government units’ service delivery framework, modernize local public financial management, and improve LGUs’ financing and investment framework.
“Much is expected from LGUs, especially now, as they are at the forefront of public service delivery during the COVID-19 pandemic,” said ADB public finance economist for Southeast Asia Aekapol Chongvilaivan.
“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,” Chongvilaivan said.
Under the program, ADB is supporting reforms to move national government functions to LGUs based on the 1991 Local Government Code. Another reform will increase revenue allocations to LGUs under a 2019 Supreme Court ruling, which clarified the scope of LGUs’ share of national taxes.
The Bureau of Local Government Finance set up a property valuation office and a committee will oversee the progress of real property tax reforms. The scope of financing for local development now includes local public–private partnership projects.
The new program builds on ADB’s support since 2006 to help the Philippines boost efficiency, accountability, and transparency in local governments’ financial management and service delivery.
A $300 million policy-based loan in 2019 helped the government create a legal and institutional framework to mobilize local revenues. A $26.5-million investment project in 2020 is supporting government initiatives and reforms to improve local governments’ real property tax collection.
ADB said it is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
