Local government units (LGUs) have not been maximizing their borrowing capacity as well as the grants and loans extended to them to finance COVID-19 response, economic managers said.
At the start of the Senate’s hearings on the proposed P4.5-trillion 2021 national budget on Wednesday, Finance Secretary Carlos G. Dominguez III said that during the past few years, LGUs borrowed only less than half of how much they could actually be extended by government financial institutions (GFIs).
Executive Director Niño Raymond Alvina of the Department of Finance’s Bureau of Local Government Finance (BLGF) explained to the Inquirer that in 2018, only 375 or 22 percent of all provinces, cities and municipalities in the country availed themselves of loans.
“Based on our certifications issued, these LGUs that tapped credit financing had a combined loan requirement of P71.9 billion” in 2018, Alvina said, even as they had an aggregate borrowing capacity of P168.3 billion.
Alvina said the latest BLGF data showed that of the 102 LGUs that borrowed so far this year, 77 did so during the COVID-19 quarantine period.
However, Alvina said only 14 of these LGUs actually borrowed to finance their COVID-19 response-related programs, activities and projects.
“While lower in number, their loan requirement [for COVID-19 response] reached P13.55 billion, with a combined borrowing capacity of P28.03 billion,” Alvina said.
“When compared to the 63 other LGUs that borrowed for the period but not related to COVID-19, the total loan requirement reached P14.68 billion, with an aggregate borrowing capacity of P52.57 billion,” Alvina added.
At the height of the COVID-19 lockdowns, GFIs such as Land Bank of the Philippines extended credit lines to LGUs.
Also, the Department of Budget and Management (DBM) released P6.2 billion to the country’s 82 provinces—equivalent to half of their monthly internal revenue allotment (IRA), on top of a bigger P30.8 billion to 146 cities and 1,488 municipalities equivalent to one-month IRA. —BEN O. DE VERA