PARIS, FRANCE – Executive Director Niño Raymond B. Alvina of the Bureau of Local Government Finance (BLGF) shared the Philippines’ insights and perspectives on the challenges and opportunities of subnational government (SNG) Finance and investments at the Asian Development Bank (ADB) and Organisation for Economic Co-operation and Development (OECD) World Observatory on SNG Finance (SNG-WOFI) Webinar entitled “Status and Implications of SNG Finance and Investment on Public Service Delivery and SDGs” on 23 November 2022 via Zoom.

In the said webinar, Executive Director Alvina discussed the role of SNG finance in public service delivery and its linkage with the SDGs.

“Quality of local public service delivery is contingent on fiscal capacity, priorities, and timely and reliable local finance data. Local public financial management (PFM) and SNG finance are inextricably linked with the SDGs, thus, when localized, resulted in unfunded devolved functions and low capital investments and budget support. The central government’s standard-setting roles over SNGs, stakeholder partnerships, and citizen engagements are crucial to strengthen the SNGs’ capacity at all levels, improve public service delivery, and promote convergence of actions with SNG finance, towards the overall country’s vision in 2040, wherein Filipinos enjoy a strongly-rooted, comfortable, and secure life”, Executive Director Alvina said.

Alvina further noted that local finance in the Philippines has improved in the past 30 years due to the increases in intergovernmental transfers from the central government and availment of credit financing options by SNGs.

CG transfers grew up to 40% as share of national taxes under the Local Government Code (LGC), from only Php724 million in 1972 to Php15 billion in 1992 to Php664 billion in 2022. In 2021, under the Mandanas-Garcia ruling, the CG transfers increased by 27 to 37%, compared to previous internal revenue allotment (IRA). There is also a notable increase in SNGs venture in credit financing schemes, non-traditional options for priority development projects, and capital investments, from outstanding loans of Php31 billion in 2004 to Php137 billion in 2021”, Alvina added.

Challenges in SNG finance were also highlighted by Alvina, stressing that most SNGs do not update tax bases on the schedule of market values, tax ordinances on business and other taxes, and regulatory fees and user charges, thus undermining the revenue generation capacity and transition to full devolution.

“Opportunities in optimizing mandatory local funds, pursuing the passage of legislative measures on real property valuation, local government unit (LGU) income classification, and LGC amendments, investing on ICT tools and digitalization and capital investment planning and budgeting, are crucial to drive SNGs’ development and improvement in local revenue mobilization”, Alvina urged.

The SNG-WOFI, a joint venture by the OECD and United Cities and Local Governments (UCLG), supported by the ADB, is the largest international knowledge repository of systematized information on SNG structure and finance, to promote knowledge sharing and dialogue on subnational finance and multi-level governance around the world.

The said webinar shared the 2022 SNG-WOFI survey findings and discussed the challenges, opportunities, and implications of fiscal decentralization and financing of SDGs to the public service delivery in Asia.