LGU borrowings reached new high of P 96.7B in ’21 | Inquirer Business
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LGU borrowings reached new high of P 96.7B in ’21

/ 04:02 AM January 12, 2022

Local governments’ borrowings reached a new high of P96.7 billion in 2021, a year before the next national elections and their bigger budget allocations alongside more, devolved functions.

The latest data from the Department of Finance’s Bureau of Local Government Finance (DOF-BLGF) on Tuesday showed the total loan requirement of the 372 certificates of net debt service ceiling and borrowing capacity (CNDSCBC) issued by the agency last year increased 11 percent from P86.8 billion in 2020.

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CNDSCBCs are documents that local governments need to submit to government financial institutions (GFI) to prove that they can repay obligations.

In 2021, 293 municipalities, 48 cities, 22 provinces, and nine barangays sought borrowings for their local programs and projects. The 372 local governments that borrowed last year exceeded the 262 in 2020.

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Municipalities’ loan requirements were the largest, at P42.2 billion or more than two-fifths of total. Cities had the biggest capacity to borrow at P131.9 billion, or over two-fifths of local governments’ total.

BLGF data showed that local governments can pay their debts, as last year’s borrowers had a total borrowing capacity of P267.3 billion—nearly three times bigger than the loans extended to them.

Per region, the biggest loans were obtained by local governments in Metro Manila, where 10 local governments with a borrowing capacity of P84.3 billion borrowed P24.4 billion in 2021.

Meanwhile, Soccsksargen hosted 50 local governments —the most in a region—that borrowed last year. Local governments in Region 12 had a combined loan requirement of P7.1 billion, which they can repay given their P17.8-billion borrowing capacity.

In the month of December 2021 alone, the BLGF issued 18 CNDSCBCs to 13 municipalities and five cities, which borrowed a total of P6.9 billion.

Last month’s local government-borrowers had a combined P28.8-billion borrowing capacity. Local governments’ borrowings in December will finance mostly infrastructure projects like roads, drainages, cemeteries, public markets, fish ports and public terminals, as well as heavy equipment and motor vehicles.Last year, the BLGF said local governments had been taking advantage of low interest rates and GFIs’ subsidy programs for projects aimed at helping them recover from the health and socioeconomic crises inflicted by the prolonged COVID-19 pandemic.

Borrowings augment local government funds as their revenue take remained below pre-pandemic levels.

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In its Fiscal Risks Statement 2022 report, the Development Budget Coordination Committee said local tax and nontax collections estimated to amount to P239.6 billion this year will be “still lower than the revenues under normal circumstances.”

BLGF data had shown that local governments’ locally sourced revenues inched up to P208.9 billion as of end-September 2021 from P207.9 billion the previous year, reflecting economic recovery.

For 2021, local government revenue collections were projected to reach P223.9 billion. If the COVID-19 pandemic did not happen, local governments had been previously expected to collect P321.6 billion this year.

During the pandemic-induced recession in 2020, local governments’ revenues fell to P251.7 billion from P253.8 billion in 2019.

—Ben O. de Vera INQ
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