The Philippines and the Asian Development Bank (ADB) have signed an agreement for a $26.5 million (or around P1.4 billion) loan that seeks to improve the capacity of local government units (LGUs) to boost revenues by instituting reforms in local property valuation and tax collection.
The Department of Finance (DOF) said in a statement over the weekend the loan for the Local Governance Reform Project (LGRP) was signed last July 1 by Carlos Dominguez, DOF secretary, on behalf of the Philippine government, and ADB Country Director for the Philippines Kelly Bird, representing the Manila-based multilateral lending institution.
The LGRP’s total project cost is $29.8 million (around P1.56 billion), of which $26.5 million will be funded by the ADB and the remaining amount to be financed by the government.
The ADB loan for the project, which is expected to be effective this month, carries a 28-year maturity period, inclusive of a nine-year grace period.
Dominguez thanked the ADB for its continuing assistance to the Philippine government’s efforts to improve the financial management and revenue-generating capabilities of LGUs, which the institution has been supporting since 2006.
“This financial assistance from the ADB for the LGRP will help LGUs close the digital divide in their respective localities as they pursue property valuation and tax reforms to generate more revenues, in step with President Duterte’s goal to modernize Philippine taxation and spell greater fiscal autonomy for our local governments,” Dominguez said.
He added the LGRP aims to improve the capability of LGUs in assessing and appraising property values to enable them to raise more revenues from real property taxes.
Among the goals of the project is the use of digital technology to implement a property valuation database and information system.
The LGRP is also expected to improve the capacity of the Bureau of Local Government Finance (BLGF) in exercising administrative supervision and oversight functions over the treasury and assessment operations of LGUs.
BLGF, an attached agency of DOF, is also tasked to assist in the formulation and implementation of policies on LGU revenue administration and fund management.
Professionalizing the ranks of licensed property appraisers and assessors and aligning local property valuation benchmarks to international standards are also among the expected outputs of the project.
Last year, the ADB approved a $300 million policy-based loan for the LGRP, which aims to create a legal and institutional framework for revenue mobilization among LGUs.