The Asian Development Bank (ADB) has approved a $300- million policy-based loan to support local government units (LGUs) boost economic growth and reduce poverty.
The loan will be used for the Local Governance Reform Program (LGRP) subprogram, which aims to equip LGUs with the ability to deliver better government services.
Improved government services can lead to simpler and investor-friendly business processes. This can lead to more jobs and poverty reduction.
“ADB supports the Philippine government’s goal of creating a high-trust society, where citizens have confidence in the capacity of local government institutions to deliver services to communities and provide a simpler business environment for private enterprises,” Director for Public Management, Financial Sector, and Trade at ADB’s Southeast Asia Regional Department Jose Antonio Tan III said.
The program will help ensure deliver services aligned with local preferences, improve their capacity to raise their own revenue, and lower the cost of doing business for the private sector.
ADB said the Philippines is a “relatively decentralized” country compared to its Southeast Asian neigbors.
This is largely due to the autonomy enjoyed by LGUs as stated in the Local Government Code of 1991. Through the law, LGUs are able to get revenue allotments from the national government and the authority to implement devolved services such as health, education, and agriculture extension.
As part of more recent efforts to empower LGUs, the government has embarked on reforms to strengthen the legal framework for local service delivery to clarify roles and responsibilities, distribute shared taxes more fairly, and improve the ability of local governments to partner and coordinate on delivering key services.
“The ADB program under LGRP is helping the government provide LGUs with the tools and skills necessary to deliver high-quality public services in an accountable and cost-effective manner,” said ADB Public Management Specialist for Southeast Asia Robert Boothe.
In 2017, the government institutionalized a three-tier competency scheme and certification program under the Standardized Examination and Assessment For Local Treasury program to ensure local treasury officers are equipped with the necessary skills and competencies to manage local resources.
The government also developed and implemented an online LGU client rating system for business permit application and releasing to enhance citizen feedback on LGU performance and service delivery. Such measures are helping to raise the country’s overall attractiveness for private sector investment.