LGUs borrowed P12.8B in Q1 for infra

Ahead of the election ban on starting new public projects, local governments borrowed P12.8 billion to fund their mostly infrastructure outlays in the first quarter, the latest Department of Finance (DOF) data on Wednesday showed.

The DOF’s Bureau of Local Government Finance (BLGF) issued 73 certificates of net debt service ceiling and borrowing capacity from January to March.

These certifications are documents that local government units (LGUs) must submit to government financial institutions to prove that they can repay their borrowings.

During the first three months, two provinces, 15 cities, 52 municipalities and four barangays sought loans from state-run development banks. These 73 LGUs had a total borrowing capacity of P29.1 billion, which meant that they were capable of settling their obligations.

In the month of March alone, the BLGF issued certifications worth P6.4 billion to 29 LGUs—one province, four cities, 20 municipalities, as well as four barangays—that have a combined borrowing capacity amounting to P9.6 billion.

Both in March and throughout the first quarter, cities had the biggest financing requirements for their priority programs and projects, the BLGF said.

Use of proceeds

LGUs’ borrowings last month would fund procurement of heavy equipment, as well as build new roads and bridges, public market and school buildings, hospitals and health centers, local police barracks, flood control and drainage systems, street lighting facilities, transport terminals and common parking areas, plus sanitary landfills and septage facilities, among other local infrastructure, the BLGF’s list of loans showed.

LGUs also borrowed to expand or improve roads, cemeteries, parks, municipal halls, water systems and public markets, among others.

The rollout of new public infrastructure projects has been prohibited since March 25, ahead of the May 9 elections.

Last year, LGUs’ annual borrowings hit a record P96.7 billion, as a flurry of local projects were jump-started and fast-tracked a year before this year’s national elections, and despite LGUs’ bigger share in the national budget coming from all government tax collections.

Given their larger budgets with the implementation of the Supreme Court’s Mandanas-Garcia ruling in full swing starting this year, more functions have been devolved or transferred to LGUs, including local infrastructure, agriculture, social welfare, health care and livelihood, among other sectors included in the Local Government Code.