PH receives P400M EU grant to improve LGUs

MANILA, Philippines–The European Union (EU) has granted P400 million to the Philippines to help it in crafting a road map that will increase revenue collections of local governments while their expenditures are kept within their respective budgets.

During the launch of the Local Government Units Public Financial Management (LGU PFM) Reform Roadmap and Implementation Strategy on Tuesday, EU Ambassador to the Philippines Guy Ledoux noted that the LGUs were “crucial and concrete” when it came to governance, as well as government spending.

“Given the high level of decentralization of the Philippines, local authorities are in the frontline of the delivery of public services, and are responsible for roughly 25 percent of public spending, or around P450 billion,” Ledoux said.

Despite the important role played by local government units (LGUs), Budget Secretary Florencio B. Abad said many local governments had been found “wanting” in terms of financial stewardship benchmarks.

“Most LGUs’ budgets are not based on plans, revenues fell short of projections, and expenditures exceeded budgets,” Abad explained.

The road map will put in place reforms “to reach the ideal state where local government budgets are more credible, and local budget processes are linked to development programs,” the budget chief said.

The reform road map is also expected to make the LGUs less dependent on the internal revenue allotment (IRA) disbursed by the national government, Abad added.

The road map and implementation strategy entails a total budget of P1.3 billion.

It will serve as a “strategic guide for LGUs to improve their public financial management, particularly revenue generation and expenditure management,” the Delegation of the EU to the Philippines said in a statement.

“By strengthening their public finance management system, LGUs will be able to improve service delivery to their constituents by ensuring that there are sufficient resources for their development initiatives, and that these resources are utilized in the most efficient and effective manner,” the EU delegation said.

The road map will be adopted by all 81 provinces, 144 cities and 1,490 municipalities in the country.