THE Bangko Sentral ng Pilipinas (BSP) said local government units (LGUs) proposed to borrow P20.2 billion in the first half, mostly for infrastructure projects.
The totals were tallied from applications to the Monetary Board (MB), which must review all LGU borrowing proposals, the BSP said in a statement on Tuesday. The MB received 107 proposals to borrow from LGUs, down from 193 requests worth P55.7 billion a year earlier.
The central bank also said 120 projects worth P25.8 billion were issued a Monetary Board opinion (MBO). Of these, 98 covered requests from the first half and 22 were from the second half of 2021.
All LGUs are required to obtain an MBO on the impact of their domestic borrowing plans.
“The requests for MB opinion came from six provinces (P2.4 billion), 12 cities (P8.7 billion), 84 municipalities (P9.1 billion), and five barangays (P41.1 million),” the BSP said.
According to the central bank, 66% of the loans were to fund infrastructure projects, including public markets, roads and bridges, multi-purpose buildings, commercial centers, healthcare facilities, school buildings, transport terminals, and others.
The BSP also said loans for heavy equipment and rescue or service vehicles accounted for 23.6% of the total.
Meanwhile, 9.7% of the financing applications covered commercial lot and site development, 0.3% was for loan refinancing and 0.3% for construction of pandemic isolation facilities.
“The need for issuance of prior opinion of the MB on the proposed borrowings of government entities, including LGUs, is mandated by law under Section 123 of Republic Act (RA) No. 7653, otherwise known as the New Central Bank Act of 1993, as amended by RA No. 11211,” the central bank said.
Under RA 11211 or the New Central Bank Act, proposed borrowing by government entities and LGUs require the MB to render an opinion on the possible impact on government finances.
“It enables the BSP to monitor trends in public sector debt and assess its impact on the monetary sector and external payments position of the economy,” the BSP said. — Keisha B. Ta-asan