Germany – The Bureau of Local Government Finance (BLGF) LGU Operations Service (LGUOS) Director Ricardo L. Bobis, Jr. shared country-level perspectives on the mechanisms to strengthen inclusive finance at the United Cities and Local Governments (UCLG) Decentralization and Local Governance (DeLog) Knowledge and Dialogue Days 2022 webinar entitled “Inclusive Local Finance in Times of Economic Downturn & Crisis – the case of the Philippines” on 07 December 2022 via MS Teams.

In the said webinar, Director Bobis, Jr. discussed the Philippines’ fiscal decentralization, fiscal performance of local governments, and initiatives to strengthen inclusive local finance.

The 1991 Local Government Code of 1991 effectively provided local governments with broader fiscal mandates: more revenue assignments, devolved expenditure responsibilities, intergovernmental transfers, and credit financing. Decentralization may have been proven suited to the geographic demands for better, more efficient service delivery in more than 7,000 islands in the country”, Director Bobis, Jr. said.

According to Dir. Bobis, Jr., the Philippines’ fiscal decentralization is guided by four (4) pillars, namely: (i) revenue assignment and local revenue administration; (ii) functions and expenditure responsibilities; (iii) intergovernmental transfers; and (iv) subnational borrowing and capital finance.

In terms of the fiscal performance of local governments, Dir. Bobis, Jr. further explained that fiscal decentralization empowered local governments to grow their own sources of revenues for the past four (4) decades.

“Local sources significantly grew from Php0.66 billion in FY1972 to Php256.21 billion in FY2021. The average annual growth rate of local collections is 11% from FY1992 to FY2021. Before the pandemic, the 3-year average growth was 13%. In 2021, the growth reached only 1%. Local income to GDP ratio decreased during election year, except in the 2010 elections, when the local income increased”, Dir. Bobis, Jr. added.

Dir. Bobis, Jr. further discussed the key initiatives being undertaken to improve local finance in the country, which include the synchronized budget calendar, credit financing modalities, LGU integrated financial tools (LIFT) system, and LGU Fiscal Sustainability Scorecard (FSS).

“In the area of public financial management, the BLGF pushes for the passage of the legislative agenda on Real Property Valuation and Assessment Reforms, Income Classification of LGUs, and Mandatory Property Insurance. The BLGF continues to implement its existing plans and programs on the (i) Standardized Examination and Assessment for Local Treasury Service (SEAL) Program; (ii) implementation of the Local Governance Reform Project (LGRP) funded by the Asian Development Bank (ADB); (iii) data analysis and performance standards through the LGU FSS and Local Government Financial Performance Monitoring System (LGFPMS); (iv) capacity building of local treasury and assessment service, (v) streamlined guidelines in issuing the Certificate of Net Debt Service Ceiling and Borrowing Capacity (CNDSC/BC); (vi) improvements in the local treasury appointments and designation process; (vii) technical supervision over local treasury and assessment office through updating of manuals relevant to their duties and responsibilities; and (viii) directive to all LGUs to digitize payments and collection for all cities and capital towns”, Dir. Bobis, Jr. urged.

The first edition of the DeLog Knowledge and Dialogue Days 2022 offered 15 sessions focusing on strengthening inclusive local governance and decentralization processes as organized by 18 new members of the DeLog network, which is composed of 48 bi-lateral and multilateral development partners and specialized institutions promoting development effectiveness in the field of Decentralization and Local Governance (DLG).