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$400 Million ADB Loan to Help Philippine Local Governments Provide More Efficient Public Services

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A woman with her baby at a government office
ADB is helping the Philippines implement reforms to ensure local governments have the capacity and adequate resources to quickly respond to the basic needs of their communities, including health care. Photo credit: ADB

The Asian Development Bank (ADB) has approved a $400 million policy-based loan to the Philippines to help improve local governments’ capacity to provide high-quality public services, especially during the coronavirus disease (COVID-19) pandemic.

The Local Governance Reform Program Subprogram 2 will help strengthen local government units’ (LGUs) service delivery framework, modernize local public financial management, and improve LGUs’ financing and investment framework.

“Much is expected from LGUs, especially now, as they are at the forefront of public service delivery during the COVID-19 pandemic,” said ADB Public Finance Economist for Southeast Asia Aekapol Chongvilaivan. “The reform program will help ensure local governments have the capacity and adequate resources to quickly respond to the basic needs of local communities at critical times like this.”

Under the new program, ADB is supporting reforms to move national government functions to LGUs based on the 1991 Local Government Code. Another reform will increase revenue allocations to LGUs under a 2019 Supreme Court ruling, which clarified the scope of LGUs’ share of national taxes. The Bureau of Local Government Finance has set up a property valuation office and a committee will oversee the progress of real property tax reforms. The scope of financing for local development now includes local public–private partnership projects.

The new program builds on ADB’s support since 2006 to help the Philippines boost efficiency, accountability, and transparency in local governments’ financial management and service delivery. A $300 million policy-based loan in 2019 helped the government create a legal and institutional framework to mobilize local revenues. A $26.5 million investment project in 2020 is supporting government initiatives and reforms to improve local governments’ real property tax collection.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

This story was first published by the Asian Development Bank on 27 August 2021.