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ADB signs $26.5M loan of PH to boost LGUs revenue collection

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By Victoria “NIKE” De Dios

Asian Development Bank has approved a US$26.5mil-loan to help the local government units (LGUs) to improve real property tax collection by strengthening property valuation mechanisms, introducing new digital tools for transparent and accurate reporting, and updating tax maps and property valuation assessments.

This loan for the Local Governance Reform Project (LGRP) was signed by Finance Secretary Carlos Dominguez III on behalf of the Philippine government and ADB Country Director for the Philippines Kelly Bird, representing the Manila-based multilateral lending institution.

Secretary Dominguez thanked the ADB for its continuing assistance to the Philippine government’s efforts to improve the financial management and revenue-generating capabilities of LGUs, which the institution has been supporting since 2006.

“This financial assistance from the ADB for the LGRP will help LGUs close the digital divide in their respective localities as they pursue property valuation and tax reforms to generate more revenues, in step with President Duterte’s goal to modernize Philippine taxation and spell greater fiscal autonomy for our local governments,” Secretary Dominguez said.

Secretary Dominguez said the LGRP aims to improve the capability of LGUs in assessing and appraising property values to enable them to raise more revenues from real property taxes.

Among the goals of the project is the use of digital technology to implement a property valuation database and information system.

The LGRP is also expected to improve the capacity of the Bureau of Local Government Finance (BLGF) in exercising administrative supervision and oversight functions over the treasury and assessment operations of LGUs.

The BLGF, an attached agency of the Department of Finance (DOF), is also tasked to assist in the formulation and implementation of policies on LGU revenue administration and fund management.

Professionalizing the ranks of licensed property appraisers and assessors and aligning local property valuation benchmarks to international standards are also among the expected outputs of the project.

The total project cost of the LGRP is US$29.8 million (around P1.56 billion), of which $26.5 million (about P1.4 billion) will be funded by the ADB and the remaining amount to be financed by the government.

The ADB loan for the project, which is expected to be effective this month, carries a 28-year maturity period, inclusive of a 9-year grace period.

The BLGF; Bureau of Internal Revenue (BIR); and Departments of Budget and Management (DBM), Department of the Interior and Local Government (DILG) and Department of Information and Communications Technology (DICT) are the agencies tasked to implement the LGRP.

Last year, the ADB approved a US$300-million policy-based loan for the LGRP, which aims to create a legal and institutional framework for revenue mobilization among LGUs.

The LGRP will support the implementation of the reforms achieved by this Program at the national and local levels.

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