LGU loans reached 19.7 billion pesos in the first half of 2022

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MANILA, Philippines—Local governments borrowed a total of P19.7 billion in the first half of 2022, mostly to finance infrastructure projects.

Latest data from the Ministry of Finance’s Bureau of Local Government Finance (DOF-BLGF) of the Ministry of Finance showed on Friday (July 15th) that the agency issued 111 net debt service ceiling and borrowing capacity certificates to the same number of Local Government Units (LGU) from January to June.

As proof of their ability to repay loans, LGUs must obtain these certifications before they can borrow from government financial institutions (GFIs).

Among LGU borrowers in the first six months, there were three provinces, 22 cities, 81 municipalities, as well as five barangays.

The BLGF said these 111 LGUs had a total borrowing capacity of 43.9 billion pesos, which meant they were unlikely to default.

By the end of June, the cities had the greatest combined loan need worth more than 8 billion pesos, as well as the greatest total borrowing capacity of 24.7 billion pesos.

In June alone, nine LGUs – one province, two cities and six municipalities – borrowed 2.6 billion pesos. June LGU borrowers had a combined borrowing capacity of 5.7 billion pesos, twice the total amount of loans they sought.

BLGF data showed that the nine LGU borrowings last month were for infrastructure projects, such as roads and bridges, hospitals and health centers, public markets, barangay halls, flood control and drainage, water supply systems, indoor basketball courts and the purchase of heavy equipment. , among others.

In April, BLGF executive director Niño Raymond Alvina told the Inquirer that financing infrastructure projects was the most common lending purpose in certificates issued by his agency from 2020 to this year.

The Marcos administration plans to spend a total of 1.19 trillion pesos, or 5.5 percent of gross domestic product (GDP), on public infrastructure development this year.

Economic officials under President Ferdinand Marcos Jr had said their plan to exploit the public-private partnership (PPP) mode to finance infrastructure projects would also benefit LGUs, as they could free up more fiscal space while assuming more decentralized functions with the implementation of the Supreme Court decision. The Mandanas-Garcia decision is in full swing.

TSB

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