THE Asian Development Bank (ADB) approved a $26.5-million (P1.32-billion) loan to help local governments generate more revenues by digitizing property tax valuation and collection.
In a statement on Monday, ADB said the loan would fund the Local Governance Reform project, which seeks to improve property valuation systems of local government units, deploying digital tools for transparent reporting and updating tax maps.
“Local governments play a critical role in poverty reduction. Mobilizing local revenue in an efficient, equitable, and transparent manner is vital to local governments’ goal of delivering accessible, quality public services,” ADB Senior Public Management Specialist for Southeast Asia Robert Boothe said.
Under the project, local assessors will be trained to make them more competent through capacity development and knowledge partnerships.
“This new project will provide the digital tools, systems, and local staff training needed to help local governments raise revenue,” Mr. Boothe said.
The ADB said the project supports the government’s Comprehensive Tax Reform Program, particularly in raising the revenue-generation capacity of local governments.
The Finance department has been pushing for valuation reforms in the real property sector since last year, noting that local governments were losing P30.5 billion of revenues due to outdated real property values.
In November 2019, the lender approved a $300-million (P15-billion) loan for the first phase of the Local Governance Reform Program that aimed to improve the public service of local governments, enhance revenue collections and lower the cost of doing business.
“The new project will support the implementation of these policy reforms at the national and local levels,” ADB said.
Meanwhile, the Department of Finance (DoF) confirmed it has signed two loan agreements worth €250 million (P14 billion) with the Agence Française de Développement (AFD) or the French Development Agency to support programs that will expand the reach of financial services and boost private sector participation in infrastructure projects.
The government obtained loans for the Inclusive Finance Development Program worth €100 million (P5.6 billion) and the Expanding Private Participation in Infrastructure Program worth €150 million (P8.4 billion).
The loan agreements were signed on June 9 by Finance Secretary Carlos G. Dominguez III and French Ambassador to the Philippines and to Micronesia Nicolas Galey.
DoF said the two programs were co-financed with the ADB and will also strengthen the Philippine economy’s resilience post coronavirus disease 2019 (COVID-19) pandemic.
“The Philippine government is grateful to the AFD for co-financing with the ADB two programs supportive of President Duterte’s overriding goal of accelerating infrastructure development in order to spur high growth, attract investments, create jobs and achieve financial inclusion for all Filipinos,” Mr. Dominguez said.
DoF said the €100-million loan for the first sub-program of the IFDP will help finance efforts of the government to expand financial services in the country, help consolidate the institutional and regulatory environment as well as improve financial infrastructure and financial services across officials and regulatory agencies.
AFD will also extend €1.5 million in technical assistance to boost digital transformation of the country’s financial institutions especially in rural areas. The program will be implemented jointly by the central bank and the Rural Bankers Association of the Philippines.
Meanwhile, DoF said the €150-million policy-based loan for the infrastructure program would develop sustainable public-private partnership (PPP) projects, boost government’s support for PPPs, widen the pipeline of private sector-led projects and enhance legal and regulatory frameworks.
Meanwhile, the DoF said there are discussions for the Philippine government to secure more funding from the European Union’s Asian Investment Facility via a grant through the PPP Center.
“The proposed grant aims to facilitate and encourage the development of sustainable PPP projects at the local level, both in terms of promoting resilient infrastructure and in the mitigation of greenhouse gas emissions. Stimulating the development of health infrastructure will be a key component of the forthcoming European Union support,” it said.
The government borrows from local and foreign sources to plug its budget deficit, which is expected to hit 8.4% of gross domestic product this year. — Beatrice M. Laforga