To finance their infrastructure outlays, 23 more local government units (LGUs) borrowed funds in November, jacking up LGUs’ cumulative 11-month loans to P89.8 billion.
From January to November, the Department of Finance’s Bureau of Local Government Finance (DOF-BLGF) issued a total of 353 certificates of net debt service ceiling and borrowing capacity—documents that LGUs needed to submit to lending government financial institutions to show that they can repay debt.
As of end-November, 279 municipalities, 43 cities, 22 provinces and nine barangays sought to borrow from state-run lenders.
The latest BLGF data showed these 353 local governments have the capability to pay their obligations, with a combined borrowing capacity of P238.5 billion or nearly three times the total amount they needed to roll out their priority programs and projects.
November borrowings
In November alone, 18 municipalities, three provinces and two cities with a total borrowing capacity of P15 billion secured P7.1 billion in loans.
During the first 11 months of 2021, municipalities borrowed P40.7 billion or nearly half of total. Cities had the biggest borrowing capacity amounting to P106.1 billion.
Local government projects to be financed by the loans they obtained last month were mostly for infrastructure projects like roads, government and school buildings, as well as construction equipment.
Low interest rates
The BLGF earlier said local governments have been taking advantage of low interest rates plus state-owned financial institutions’ subsidy programs for projects intended to help provinces, cities, municipalities and barangays recover from the COVID-19 crisis.
Some local governments continued to borrow to beef up their health systems and services amid the prolonged pandemic.
As early as October, the P82.6 billion in cumulative local governments loans already exceeded last year’s total of P81 billion.