Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
MANILA, Philippines — The provinces of Cavite, Batangas, and Nueva Ecija led the surge in local government units seeking the green light from the central bank to take on more loans during the second half of last year, according to the monetary regulator.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that Cavite submitted for clearance two loans totaling P4.6 billion that would be used to finance the construction of a government complex as well as a provincial wi-fi project including the procurement of bandwidth for it.
Batangas, on the other hand, wants to take out a P4-billion loan that will be used to fund COVID-related projects including service vehicles and heavy equipment, health facilities, and computer software, among others.
Meanwhile, Nueva Ecija submitted for the approval of the central bank’s Monetary Board two loans with a combined value of P3 billion for its rice production support program, and the construction of a commercial complex that would host shopping malls and other developments.
All told, for the second semester of 2020, the BSP processed 160 LGU requests for Monetary Board approval with total proposed loans of P42.8 billion. The number of requests during this period was higher by 72 percent than the 93 requests processed in the first half of last year.
The requests for central bank approval processed in the second half of 2020 came from 17 provinces with a total proposed loan value of P18.9 billion, 21 cities wanting to borrow P9.2 billion, 120 municipalities with P14.6 billion in proposed loans, and two barangays wanting to take out P4.2 billion in loans.
Of the total number of LGU requests, 140 requests or 87.5 percent were approved by the Monetary Board, with a total loan amount of P38.2 billion. The processing of the remaining 20 requests was deferred due to incomplete documents or information submitted.
Among the 17 Philippine regions, the largest number of LGU requests that were approved came from Central Luzon at 10.7 percent, with loan purposes that are mostly intended for infrastructure projects and acquisition of heavy equipment.
There were also some proposed loans that were intended to fund measures to address the COVID-19 pandemic, such as for the acquisition of health service vehicles, construction of isolation/quarantine facilities, procurement of personal protective equipment, hospital equipment, medicines, reagents, and testing kits, as well as provision of food assistance and relief goods.
The prior opinion of the Monetary Board on the proposed borrowings of government entities, including LGUs, is mandated under the New Central Bank Act of 1993. This law requires the government, its political subdivisions or instrumentalities, to request the central bank to render its opinion on the monetary and external sector implications of their proposed loans prior to undertaking any credit operation.