LOCAL government units (LGUs) proposed to borrow P43 billion in the first half, up 172% from a year earlier, the Bangko Sentral ng Pilipinas (BSP) said.
In a statement on Tuesday, the BSP said it received a total of 138 requests for Monetary Board opinions (MBOs) on proposed LGU borrowings, against 75 previously.
“The significant increase was likely due to the resumption of government plans and projects a year after the conduct of the national and local elections in 2022,” the BSP said.
The requests were submitted by 109 municipalities (P16.1 billion), 21 cities (P24.1 billion), four provinces (P2.9 billion) and four barangays (P21.5 million), mostly in Central Luzon, Calabarzon, and the Western Visayas.
The central bank also said the Monetary Board processed 126 LGU proposals to borrow worth P41 billion in the first six months. Of these, 11 were carried over from 2022, while 23 requests remain under review.
All LGUs are required to obtain an MBO assessing the impact of their domestic borrowing plans.
According to the central bank, 64% of the loans were to fund infrastructure projects, including public markets, roads and bridges, multi-purpose buildings, commercial centers, healthcare facilities, school buildings, and transport terminals.
The BSP also said loans for heavy equipment and rescue, or service vehicles accounted for 20.5% of the total.
Meanwhile, 15.3% of the loans were intended for the acquisition of lots and site development for the future. About 0.2% of the applications were refinancing exercises.
MB opinions on LGU borrowing is required by Section 123 of Republic Act No. 7653, or the New Central Bank Act of 1993.
“This provision of the law stems from the BSP’s role as the government’s advisor on official credit operations. This process enables the BSP to monitor trends in public-sector debt and assess their impact on the monetary sector and external payments position of the economy,” the BSP added. — Keisha B. Ta-asan