Proposed local government borrowings nearly tripled in the first six months this year to P43.1 billion from only P15.8 billion in the second half last year.
The 172 percent proposed expansion in LGU borrowings helps concretize the actual 6.7 percent jump in government spending in the third quarter this year versus the minus 7.1 percent or contraction of such spending in the second quarter. This acceleration helps explain the 5.9 percent growth of the economy in just the third quarter this year.
According to the Bangko Sentral ng Pilipinas (BSP), the numbers are a reflection of the near tripling of requests by local government units (LGUs) before the policy-making monetary board (MB) of the BSP to render an opinion on the planned borrowings. A total 138 LGU requests were submitted to the MB in the first six months this year from only 109 requests a semester earlier.
Legislation specifically the New Central Bank Act of 1993, mandates even LGUs to seek the judgment of the MB on the monetary and external sector implications of their borrowing activities.
A total 109 municipalities, 21 cities, four provinces and four more barangays look to the financial sector for funds to build for their constituencies their pet projects. The aggregate of their proposed borrowing total P15.8 billion.
Of this number, the MB has passed judgment on only 126 of the requests brought to its attention involving local government projects totaling P41 billion. Of the number that passed MB muster, 115 relate to requests submitted in the first six months this year, sharply higher than only 11 such requests a semester earlier.
The Bangko Sentral ng Pilipinas (BSP), in its continued commitment to transparency and good governance, releases information on the issuance of Monetary Board opinions (MBOs) on the proposed domestic borrowings of local government units (LGUs). This information includes the amounts and intended purpose of the proposed loans of LGUs.
The requests for MB opinion came from 109 municipalities (P16.1 billion), 21 cities (P24.1 billion), four (4) provinces (P2.9 billion) and 4 barangays (P21.5 million) which were located mostly in Regions III (Central Luzon), IV-A (CALABARZON) and VI (Western Visayas), the BSP said.
