ADB approves $300 million policy loan for LGUs

MANILA, Philippines — Manila-based Asian Development Bank (ADB) has approved a $300 million policy-based loan for the Philippines to support efforts at improving the services provided by local government units (LGUs). 

The loan is provided under the Local Governance Reform Program (LGRP) subprogram 1 which was designed to capacitate LGUs to meet the needs of citizens, ensure their services are aligned with local preferences, improve their capacity to raise their own revenue, and lower the cost of doing business for the private sector.

The program is in line with the Philippine government’s medium-term plan to expand the role of LGUs as catalysts of local economic development. 

“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. A healthy business environment will lead to more jobs and strengthen the local economy,” said Jose Antonio Tan III,  director for public management, financial sector, and trade at ADB’s Southeast Asia Regional Department.

The bank notes that the Philippines is a relatively decentralized nation, especially when compared with its neighbors in Southeast Asia. 

The bank has partnered with the Philippine government since 2006 on a program meant to ensure that decentralization results in inclusive growth, quality service delivery, and better economic opportunities for a rapidly growing population.

As part of more recent efforts to empower LGUs, the government has embarked on reforms to strengthen the legal framework for local service delivery to clarify roles and responsibilities, distribute shared taxes more fairly, and improve the ability of local governments to partner and coordinate on delivering key services.

“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,” said ADB public management specialist for Southeast Asia Robert Boothe.

In 2017, the government institutionalized a three-tier competency scheme and certification program under the Standardized Examination and Assessment For Local Treasury program to ensure local treasury officers are equipped with the necessary skills and competencies to manage local resources.

The government also developed and implemented an online LGU client rating system for business permit application and releasing to enhance citizen feedback on LGU performance and service delivery. 

Such measures are helping to raise the country’s overall attractiveness for private sector investment, said ADB.