THE Bangko Sentral ng Pilipinas (BSP) received nearly 300 requests for Monetary Board opinions (MBOs) on the proposed domestic borrowings of local government units (LGUs) in 2023.
The data showed there were 297 requests made in 2023. This is composed of 138 requests in the first semester and 159 requests in the second semester last year.
This covered P92-billion worth of proposed domestic borrowings from various LGUs nationwide. This included P43.1 billion in the first semester and P48.9 billion in the second semester of 2023.
“The government, including its political subdivisions or instrumentalities, is required to request an MB opinion on the monetary and external sector implications of their proposed loan/s prior to undertaking any credit operation,” BSP said.
“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,” it added.
In the second semester of 2023, the requests for MBOs came from 123 municipalities worth P15.9 billion; 20 cities, P22.6 billion; 11 provinces, P10.3 billion; and five barangays, P109.3 million.
These were located mostly in Region 3 (Central Luzon), Region 4-A (Calabarzon), Region 5 (Bicol), Region 6 (Western Visayas), Region 7 (Central Visayas) and Region 12 (Soccsksargen).
“During the semester in review, the MB rendered its opinion on 143 LGU proposed borrowings totaling P45 billion. The said MB issuances were for 125 requests received in S2 2023 and 18 requests received in S1 2023,” BSP said.
“The remaining 34 requests received in the semester under review are awaiting the submission of complete information and/or documentary requirements by the borrowing institutions,” it added.
The BSP said in terms of loan purpose, the majority of loans were intended for infrastructure projects accounting for 61.4 percent.
These projects include the construction and/or improvement of farm-to- market/access roads and bridges, public markets, and multi-purpose buildings/ business/ commercial centers.
The list also includes health care facilities or hospitals, school buildings, solid waste management/materials recovery facilities, water system and septage treatment, and drainage and sewerage systems.
The BSP said some LGU borrowings, which accounted for 19.5 percent, were intended for the acquisition of lots and/or site development for the eventual construction of various buildings/facilities.
This also included permanent working capital for the acquisition of palay from small farmers, and acquisition and installation of various e- governance systems, among others.
In terms of other purposes, accounting for 19 percent of the total, LGUs sought borrowing to acquire heavy equipment and service vehicles.
The issuance of MB opinions on domestic borrowings is pursuant to Section 123 of Republic Act (RA) 7653, otherwise known as the New Central Bank Act of 1993, as amended by RA 11211.
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