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ADB approves $300-M loan for Philippine LGU support

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THE ASIAN DEVELOPMENT BANK has approved a $300-million loan from the Asian Development Bank (ADB) to help local government units (LGUs) improve public services and revenue collections as well as reduce the cost of doing business, the regional lender said in a press release on Thursday.

The loan covers the first segment of the Local Governance Reform Program (LGRP).

“The ADB program under LGRP is helping the government provide LGUs with the tools and skills necessary to deliver high-quality public services in an accountable and cost-effective manner,” the statement quoted Robert Boothe, ADB Public Management specialist for Southeast Asia, as saying.

While the program’s final framework was not immediately available, an ADB concept paper published in November last year that spelled out the initial draft of the program showed this segment will support improvements to Republic Act No. 7160, or the Local Government Code of 1991; increasing local autonomy over natural resource revenues; harmonization of rates of local fees and charges; adoption of a new subnational public financial management (PFM) financial reporting platform and establishment of an electronic compendium of local PFM rules and issuances. The loan may also be used to fund a local financing and debt framework or an LGU disaster risk financing framework.

Under the implementation arrangements, the Department of Finance will act as the loan’s executing agency, while the Department of Budget and Management, Department of the Interior and Local Government, and Bureau of Local Government Finance will be the primary implementing agencies.

In 2017, the Philippine government established a three-tiered Standardized Examination and Assessment For Local Treasury program to ensure that local treasury officers are skilled and competent to manage resources.




It also adopted an online LGU client rating system for business permit application and releasing to encourage citizen feedback on LGU performance and service delivery. “Such measures are helping to raise the country’s overall attractiveness for private sector investment,” ADB said.

“ADB supports the Philippine government’s goal of creating a high-trust society, where citizens have confidence in the capacity of local government institutions to deliver services to communities and provide a simpler business environment for private enterprises,” Jose Antonio Tan III, director for Public Management, Financial Sector and Trade at ADB’s Southeast Asia Regional Department, said in the same statement.

“A healthy business environment will lead to more jobs and strengthen the local economy.”

ADB has 68 members, of which 49 are Asian countries.

In October, ADB announced that it plans to invest at least $2.5-3 billion annually to reach $12.1 billion in 2019-2022.

The lion’s share or nearly 60% of the total lending program in that period is meant to finance transportation projects like roads, railways, bridges and elevated pedestrian walkways. — Beatrice M. Laforga

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