BSP reviews ₱25.1-B proposed LGU loans

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has assessed and provided opinions on ₱25.1-billion local government units (LGU) projects from January to June this year.

These are LGU requests for Monetary Board opinions for their 93 proposed loans in the first semester this year which was 31 percent more than 71 requests in the second half of 2019.

For the 2020 period, the BSP said these requests came from 11 provinces, 13 cities, and 69 municipalities.

“Of the total number of LGU requests, 78 requests or 83.9 percent were rendered a Monetary Board opinion, with a total loan amount of ₱22.3 billion. The processing of the remaining 15 requests were deferred due to incomplete documents or information submitted,” said the BSP.

It said that of the 17 regions, the most number of LGU requests came from the SOCCSKSARGEN or Region XII with 14.1 percent of the total requests. The BSP said the subject loans are for infrastructure projects and acquisition of heavy equipment. Under Republic Act No. 7653 or The New Central Bank Act of 1993 and its amended version RA No. 11211, LGUs are required to seek Monetary Board opinions for each financing or domestic borrowings they will avail of for transparency and for BSP to review the intended purpose of the proposed loans and its impact on the economy and financial system.

The central bank said it occupied “the role as the government’s advisor on official credit operations” and the review of LGU loans “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 said provision (in the law) requires the government, its political subdivisions or instrumentalities, to request the Monetary Board to render its opinion on the monetary and external sector implications of their proposed loans prior to undertaking any credit operation,” said the BSP.