ADB lends $400 million to Philippines for LGUs’ COVID-19 response

MANILA, Philippines — The Philippines has secured a $400 million (P19.98 billion) loan funding from the Asian Development Bank (ADB) to help local government units in the country provide better services amid the pandemic.

In a statement, the Manila-based multilateral lender said it has approved a $400-million policy-based loan for the Local Governance Reform Program Subprogram 2.

The program aims to boost LGUs capacity in providing high-quality public services, especially amid the pandemic.

The program will particularly improve LGUs’ service delivery framework, modernize local public financial management, and improve their financing and investment framework.

ADB Public Finance economist for Southeast Asia Aekapol Chongvilaivan said there are high expectations from LGUs as they are at the forefront in delivering services to their constituents.

“The reform program will help ensure local governments have the capacity and adequate resources to quickly respond to the basic needs of local communities at critical times like this,” Chongvilaivan said.

Under the program, ADB is backing reforms to move national government functions to LGUs based on the Local Government Code.

The latest ADB financing will also complement the reform that will hike revenue allocations to LGUs under the Mandanas Ruling.

The Bureau of Local Government Finance has set up a property valuation office and a committee will oversee the progress of real property tax reforms. The scope of financing for local development now includes local public–private partnership projects.

Since 2006, ADB has been aiding the country to boost efficiency, accountability, and transparency in local governments’ financial management and service delivery.

In 2019, it financed a $300 million policy-based loan to create a legal and institutional framework to mobilize local revenues.

Last year, a $26.5 million investment project supported government initiatives and reforms to improve LGUs’ real property tax collection.

A record $4.2 billion was lent to the Philippines last year, representing 13.2 percent of ADB’s total lending of $31.6 billion in the Asia Pacific region.

This makes the Philippines the second largest recipient of funding from ADB, next to India’s $4.4 billion.

ADB remains one of the country’s largest sources of official development assistance, with average annual lending of $1.9 billion over the last five years.