LOCAL government units (LGUs) have increasingly sought the opinion of the monetary board (MB) for their domestic borrowings in the first half of 2021, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.
In a statement, the BSP said it has received 198 LGU requests for opinion of the MB on their proposed domestic borrowings, with a total proposed loan amount of P47.2 billion.
This was higher by 23.8 percent than the 160 requests received in the second half of 2020, which amounted to P42.8 billion.
The prior opinion of the MB on the proposed borrowings of government entities, including LGUs, is mandated by the New Central Bank law (Republic Act 11211). RA 11211 requires the government, its political subdivisions or instrumentalities, to request the MB to render its opinion on the monetary and external sector implications of their proposed loans 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.
Broken down by LGU type, the number of requests received in the first half of the year were from 21 provinces for a total of 13.billion, 18 cities for P15.billion, 157 municipalities for P19.1 billion and two barangays for P25.5.million.
The BSP said most of the proposed loans of LGUs were largely intended for infrastructure projects, comprising 67.5 percent of the total proposed loans.
These infrastructure projects include the construction and improvement of government buildings, public markets, multi-purpose buildings, convention halls, commercial establishments, farm-to-market and access roads, water system, health care facilities or hospitals, school buildings, sports complex or gymnasium, as well as public transport terminals, among others.
Other proposed loans were intended for the acquisition of heavy equipment and procurement of rescue and service vehicles, accounting for 20.5 percent of the total proposed LGU loans.
Meanwhile, 10 percent of the total proposed LGU loans were allocated for the acquisition of lots and site development for sanitary landfills, waste management or recovery facilities, as well as loan refinancing.
The remaining 2 percent of the total proposed LGU loans were for the purpose of supporting the country’s response to the Covid-19 pandemic.
These include the construction of Covid-19 monitoring and/or isolation facilities and rehabilitation areas, acquisition of service vehicles for disease surveillance and contact tracing, and procurement of medical equipment, reagents, testing kits, and protective personal equipment sets.