THE PHILIPPINES is set to sign a new official development assistance (ODA) loan agreement from France to support local government fiscal reforms.
“The Philippines will soon sign an agreement with Agence Francaise de Developpement (AFD) for a €100-million loan (equivalent to around $115 million) to support the Local Government Finance and Fiscal Decentralization Reform Program, Sub-program 2 (LGFFDR2),” the Department of Finance (DoF) said in a statement.
The DoF added that it hopes to disburse the loan “in the fourth quarter of this year or the first quarter of 2018.”
It said that the loan was offered “in recognition of efforts to achieve inclusive growth and reduce poverty by creating a conducive fiscal framework for inclusive growth; developing an adequate and equitable resource framework for fiscal sustainability; strengthening public financial management to assist efficient local government unit service delivery; and fostering good local governance, transparency and accountability.”
“As such, all activities/policy actions/indicators necessary to facilitate the disbursement of the LGFFDR2 had already been successfully achieved by the (national government),” the DoF said.
The program will also be co-financed by the Asian Development Bank (ADB), which is providing $250 million.
According to an ADB project data sheet, the program targets the establishment of a resource framework for fiscal sustainability to be developed for local government units (LGUs), and a strengthened public financial management system to assist efficient LGU service delivery.
It also aims to establish local governance, transparency, and accountability systems, as well as a fiscal framework for inclusive growth.
In 2014 the government signed the financing agreement for first sub-program of the Fiscal Decentralization Reform Program, for which the AFD provided $150 million, and the ADB $250 million.
The government plans to borrow P727.7 billion this year, with P182.77 billion to be sourced from external lenders.
Next year, the borrowing plan is P888.2 billion, with P176.27 coming from foreign borrowers. – Elijah Joseph C. Tubayan