DILG to assist LGUs in IRA monetization – Puno

Interior Secretary Ronaldo Puno said yesterday the Department of the Interior and Local Government (DILG) will help 600 municipalities secure their share of their internal revenue allotments through a Palace-backed IRA monetization program.

Puno said the DILG, through its regional officials, will help facilitate the release of the IRA funds for development programs and projects in the countryside.

He said P3.2 billion of the IRA has been released so far to 900 municipalities in two tranches through the Monetization of IRA Collectibles for Local Empowerment (Miracle) program, which gives local government units (LGUs) the option to monetize in advance their respective shares from unreleased IRA allocations at a discounted value.

LGUs not inclined to monetize their IRA funds in advance have the option of having such funds released to them in installments from next year up to 2013, Puno said.

"I have directed DILG officials assigned to the different regions to coordinate with the respective officers LMP (League of Municipalities of the Philippines) to assist municipal mayors who have not yet been informed of the Miracle program or have yet to secure the necessary requirements for the monetization of their IRA," Puno said.

He said that while LGUs have the choice of obtaining their IRA through installments between 2007 and 2013, "we are encouraging them to avail of the Miracle program because this will give them the opportunity to secure funds that they can immediately use to bankroll projects and programs to improve the delivery of basic services to their respective constituencies."

Some 600 municipalities have yet to signify their intention to secure their IRA share, totaling P2.7 billion, through the Miracle program.

The rest of the P17.5 billion in unreleased IRA funds will be disbursed to provinces, cities and barangays through their respective leagues.

The Miracle program offers the lowest transaction fees for LGUs considering that this involves a government-to-government transaction, the DILG said.

The discount rate for IRA certificates to be auctioned off by the Bureau of Treasury (BOT) at market rates will ensure transparent and competitive pricing, thus maximizing benefits for LGUs through higher net proceeds, the DILG said.

The monetization program is an offshoot of Executive Order No. 494 directing the DILG, and the Departments of Finance (DOF) and of Budget and Management (DBM) to take the necessary steps to ensure that provinces, towns, cities and barangays receive their respective share from P17.5 billion of the unreleased IRA for 2000 and 2001 — either on installment basis or through a monetization program.

The League of Provinces of the Philippines, League of Cities, LMP and the Liga ng mga Barangay have agreed to designate the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LandBank) as joint issue managers and lead underwriters for its Miracle program.

The monetization of the IRA is being managed by both the DBP and the LandBank, which will also act as co-trustees of a special-purpose trust fund for the program.

Under the General Appropriations Acts for 2000 and 2001, an aggregate amount of P20 billion of the IRA of LGUs has been set aside and placed under unprogrammed funds, or those not earmarked for specific projects.

Last year, the Supreme Court ruled that the earmarking of part of the IRA by the executive or the legislative departments as unprogrammed funds was unconstitutional.

Of the P20 billion placed in unprogrammed funds, P2.5 billion was disbursed to LGUs, leaving P17.5 billion unreleased. In view of the SC ruling, the Department of Justice (DOJ) issued a legal opinion last year clarifying that the remaining IRA balance should be released to LGUs without need of any further or new appropriations. — Cecille Suerte Felipe, Edith Regalado