BSP fast-tracks LGU borrowings

The Bangko Sentral ng Pilipinas (BSP) plans to further expedite the review process in securing opinions that will allow local government units (LGUs) to avail of loans.

In a speech during the general assembly of the League of Municipalities of the Philippines (LMP), BSP Governor Amando Tetangco Jr. said the move would help preserve the 68 quarters of uninterrupted or sustained economic growth.

Tetangco noted the central bank recognizes the importance of credit to LGUs particularly municipalities, prompting it to issue circulars to streamline the documentary requirements and facilitate the review process to secure opinions from the central bank’s Monetary Board on loans.

“These efforts constitute BSP’s support for LGUs in delivering critical economic and social services to your constituents,” he said.

The BSP noted a significant increase in LGU’s engagement with the BSP with a 35 percent increase in requests for MB opinion to 347 last year from 257 in 2014.

About 76 percent of the requests we received in 2015 came from municipalities involving a total of P12.2 billion.

Tetangco said the BSP rendered MB opinion on 334 or 96 percent of the requests.

“It is notable that the majority of the loans for which BSP rendered an opinion in 2015 were used for infrastructure projects such as farm-to-market roads, public markets and multi-purpose halls,” he added.

Tetangco said the purposeful spending by local governments provide a boost not only to community development but also to broader national growth.

The country’s gross domestic product (GDP) growth picked up to 6.3 percent in the fourth quarter of last year from the revised 6.1 percent in the third quarter on the back of improved government spending and robust domestic demand.

“Our growth would have been better if we did not have to deal with the adverse effects of El Niño, other weather disturbances and adverse external conditions. In fact, analysts describe Philippine economic growth as remarkable, as it is taking place when the global economy is slowing down as a result of financial and geopolitical challenges,” Tetangco said.

The government as mandated under the 1987 Constitution requires prior opinion of the BSP’s MB on all government loans including those from LGUs to ensure that borrowings are consistent with overall state financial goals.

The BSP has launched 45 credit surety funds across the country that have granted more than P2 billion in loans to micro, small and medium enterprises.