Bangko Sentral ng Pilipinas main office in Manila. -- CRAG

LOCAL GOVERNMENT units (LGUs) sought Monetary Board opinions (MBOs) to borrow P48.9 billion in the second half of 2023, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement, the central bank said it received a total of 159 requests for MBOs during the period.

“The total number of LGU requests and total amount were higher by 15.2% and 13.5%, respectively, compared with the 138 requests received amounting to P43.1 billion in the first semester of 2023,” it said.

Some P22.6 billion worth of opinion requests were generated by 20 cities, followed by 123 municipalities seeking opinions on P15.9 billion, 11 provinces proposing to borrow P10.3 billion, and five barangays requesting clearance to take on P109.3 million worth of debt.

The requesting LGUs were mainly from Central Luzon, Calabarzon, Bicol, the Western Visayas, the Central Visayas and Soccsksargen.

In terms of opinions issued, it said that “the MB rendered its opinion on 143 LGU proposed borrowings totaling P45.0 billion. The said MB issuances were for 125 requests received in the second semester of 2023 and 18 requests received in first semester of 2023,” the BSP said.

“The remaining 34 requests received in the semester under review are awaiting the submission of complete information and/or documentary requirements by the borrowing institutions,” it added.

Some 61.4% of the proposed loans were intended for infrastructure projects, such as farm-to-market roads, bridges, public markets, and multi-purpose buildings.

“Meanwhile, some LGU borrowings (19.5%) were intended for the acquisition of lots and/or site development for the eventual construction of various buildings/facilities as well as permanent working capital for the acquisition of palay from small farmers, and acquisition and installation of various e-governance systems.”

The remaining 19% of loans was used to acquire heavy equipment and procure vehicles.

Under the law, LGUs are required to request MBOs on the “monetary and external sector implications of their proposed loan/s prior to undertaking any credit operation.”

“This provision of the law stems from the BSP’s role as the government’s advisor on official credit operations. This process enables the BSP to monitor trends in public sector debt and assess their impact on the monetary sector and external payments position of the economy.” — Luisa Maria Jacinta C. Jocson