The National Economic and Development Authority (Neda) said on Thursday that local government units (LGUs) must ensure that they will be able to spend the funds they get from the national government if they want a higher budget.
Socioeconomic Planning Secretary Ernesto M. Pernia said LGUs must be able to improve their absorptive capacity in view of the Supreme Court’s decision to grant the Mandanas petition. The High Court’s decision will take effect in 2022.
Pernia noted that LGUs must focus on improving their fund utilization especially since about 50 percent, or P300 billion, of all revenues of the national government will be given to local governments starting 2022.
“It’s [absorptive capacity] just a risk, it’s a possibility and we are just flagging that as one of the risks. I’m sure there are many LGUs who are very good at implementing projects and absorbing funds. But I’m sure they are not equal. Not all LGUs are created equal,” Pernia said.
He said efforts to improve absorptive capacity can be done by addressing barriers to entry, particularly of investors who are not originally from these provinces, cities and municipalities.
The Neda chief also said during the hearing on the 2020 national budget at the House of Representatives that these barriers to entry will discourage development.
Neda Undersecretary for Policy and Planning Rosemarie G. Edillon also told reporters that LGUs must also address their manpower concerns before they are given more money in 2022.
Edillon said granting LGUs more resources will not affect the country’s fiscal deficit, but this could lead to fewer national government projects in the provinces and other localities.
“Between now and 2022, there has to be more in terms of coordination, those national government agencies that are now implementing it but [others have yet to] transfer [funds] that’s why as early as now we are flagging it,” she said.
Earlier, newly elected local officials looking to spend more for various public services and projects during their term may have to consider some belt-tightening measures with the adoption of the 2016 masterlist of land areas.
In an interview with the BusinessMirror, Neda Regional Development Office Undersecretary Adoracion M. Navarro said the National Land Use Committee has instructed concerned agencies to adopt the 2016 masterlist of land areas based on the latest cadastral survey of the Land Management Bureau.
Based on the 2015 cadastral survey, the land area of the Philippines became significantly smaller than previously estimated. This, Navarro said, will impact not only on the size of the LGUs but also on the internal revenue allotment (IRA) they receive from the national government.
In its July 3, 2018, decision, the High Court increased the IRA of LGUs to include the tax collection of other agencies aside from the Bureau of Internal Revenue as basis for the computation.
However, concerns on the implementation of the decision were raised by the national government in a motion for reconsideration filed soon after the SC decision was released.
In April this year, the SC has maintained its decision which declared that the IRA share of all LGUs be based on the collections of all national taxes, and not only from national internal revenue taxes collected by the government. The SC also moved to implement the new computations in 2022.