The Manila City Hall Clock Tower
Photo file THEPHILBIZNEWS
By Alithea De Jesus
Citing the critical role of the local government units (LGUs) in the difficult task of rebuilding the pandemic-battered economy, Department of Finance Secretary Carlos Dominguez III called on the elective executives to make the best use of resources readily available to them to bankroll their recovery programs and help revive enterprises in their localities hardest hit by the global crisis.
Under the Republic Act (RA) No. 11494 or the Bayanihan To Recover As One Act (Bayanihan 2) as well as innovative solutions provided by government financial institutions (GFIs) can help local economies recover quickly from the COVID-19 crisis, Dominguez said.
On behalf of the national government, Dominguez thanked the local chief executives who performed beyond expectations to be able to deliver emergency assistance to marginalized communities and enforce quarantine measures to help curb the spread of COVID-19.
“The local governments did not fail us. We were all unprepared to undertake new and heightened responsibilities in our COVID-19 response efforts. Despite this harsh reality, many LGUs performed beyond expectations. The effects of this pandemic would have been more severe had our local governments and health system not stood resilient. The national government is grateful for all your efforts,” Dominguez said during the webinar hosted by the Bureau of Local Government Finance (BLGF) to mark its 33rd founding anniversary.
Local chief executives led by Union of Local Authorities of the Philippines (ULAP) president and Quirino Governor Dakila Carlo Cua attended the online event.
Dominguez said that among the credit lines under Bayanihan 2 that local governments can access for their respective economic recovery programs are the P1 billion allocation each to the Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP) for the interest subsidies on new and existing loans secured by LGUs.
Additional capital has also been infused into these government banks under Bayanihan 2 to provide wholesale financing to rural banks and microfinance institutions so that they can expand lending to small enterprises, he added.
Aside from these, the local governments can also access loans from the Municipal Development Fund Office (MDFO), which will be transformed into a more effective and efficient LGU lending intermediary, Dominguez said.
Dominguez also suggested the innovative measure of getting the local governments to enter into an agreement with the Philippine Guarantee Corp. (PhilGuarantee) to secure the loans extended to pandemic-hit sectors in their respective localities as a way to maximize the use of the LGUs’ available funds.
He said that on the part of the Department of Finance (DOF), the BLGF has already sped up the process of issuing the certificates on the net debt service ceiling and borrowing capacity to the LGUs through electronic processing to make it a lot easier for LGUs to obtain loans.
The DOF, through the BLGF, has also been conducting training programs to raise the competencies of LGU treasurers, Dominguez said.
“The devolution of services to LGUs highlights the direct contributions of local government finance toward mobilizing resources, bridging financing gaps, and investing for local economic development. The DOF stands ready to help LGUs become better equipped to perform these fiscal functions,” Dominguez said.
He commended the BLGF under Executive Director Niño Raymond Alvina for its hard work in continuously improving local fiscal management and empowering LGUs by, among others, building the financial literacy and revenue-generating capabilities of local governments.
Dominguez pointed out that at both national and local levels, the government needs to optimize its revenue generation powers and improve tax administration.
To achieve this goal, he urged LGUs to adopt digital technologies, which will also translate into more responsive governance and the efficient delivery of frontline services.
“The LGUs are vital in the difficult task of rebuilding our economy. Closer to the ground, they are best positioned to help revive our enterprises, the hardest hit by the pandemic. They can help pump prime the national economy through local public investments,” Dominguez said.
He also called on LGUs to signify to Congress the urgency of enacting the 2021 national budget, the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), the Financial Institutions Strategic Transfer (FIST) Act, and the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act within the year.
Dominguez said these priority legislative measures will help the economy and businesses recover from the pandemic by lowering the corporate income tax rate and enhancing the flexibility of the fiscal incentives system; allowing banks to dispose of non-performing loans and assets through asset management companies so that they can lend more to micro, small and medium enterprises (MSMEs); and enabling government banks to form a special holding company to support strategically important companies facing solvency issues.
“Be assured that the national government will continue to work with local governments to keep their constituents healthy and their local economies functioning and growing,” Dominguez said.