More LGUs resort to borrowings amid pandemic

Carlos Dominguez III

Amid a pandemic, the number of local government units (LGUs) which borrowed to augment their budgets in 2020 jumped to 271 even as only 18 of these borrowings were allotted for COVID-19 response.

Latest data from the Department of Finance’s Bureau of Local Government Finance (DOF-BLGF) showed that the number of net debt service ceiling and borrowing capacity certificates issued to LGUs climbed from 179 in 2019 or before the pandemic struck. LGUs need to secure these certifications before they can borrow from government financial institutions to prove their ability to settle their obligations. Last year, 26 provinces, 38 cities, 205 municipalities and two barangays borrowed a total of P81.03 billion to fund their programs and projects.

These 271 LGUs had a cumulative borrowing capacity of P202.47 billion, or more than double the total amount of loans they sought.

BLGF data showed that only 21 of these LGUs had borrowing capacity smaller than their loans. An earlier BLGF statement said the 18 LGUs that borrowed for COVID-19 purposes had a combined loan requirement of P16.25 billion as of end-December last year.

Nine provinces borrowed P12.41 billion to add to their COVID-19 budgets; four cities, P2.67 billion, and five municipalities, P1.18 billion.

“The proposed projects for COVID-19 response include procurement of equipment and medical supplies for testing, construction of clinics and hospitals, procurement of electronic equipment for students, support to local farmers, among others,” the BLGF said last month.

Last year, Finance Secretary Carlos Dominguez III urged LGUs to “make the best use of their borrowing capacity to bolster recovery programs” from the health and socioeconomic ills inflicted by the COVID-19 pandemic.

State-run lenders Development Bank of the Philippines and Land Bank of the Philippines as well as Philippine Guarantee Corp. have made available financing facilities to aid LGUs in fighting COVID-19, Dominguez had noted.

“LGUs are vital in the difficult task of rebuilding our economy. Closer to the ground, they are best positioned to help revive enterprises hardest hit by the pandemic. They can help pump prime the national economy through local public investments,” according to Dominguez. INQ