Letter from the DoF on Various Financing Options for LGUs

By LCP Secretariat
February 4, 2020



Reference No. (2020-03-09)




The Honorable City Mayors



The LCP Executive Director



Letter from the Department of Finance on Various Financing Options for LGUs, National Budget Circular No. 578 Guidelines on the Release of Funds for FY2020, and Section 87 of the General Appropriations Act

DATE: 04 February 2020



On 29 January 2020, our National President met with the Department of Budget and Management Secretary Wendel E. Avisado to follow-up on the status of the Green, Green, Green Program, and the updated guidelines on the utilization of the 20\% development fund and the Special Education Fund. Secretary Avisado shared that no disbursements have been made on the GGG Program for 2019 and that the consultation on the amendments to the 20\% development fund and the SEF utilization is on-going.


During the meeting, Secretary Avisado shared the following documents:


1. Letter from DOF Secretary Carlos Dominguez providing additional financing options from Landbank of the Philippines and the Development Bank of the Philippines to fund local infrastructure and other socio-economic projects of cities. This is also connected to Memorandum No. 2020-01-04, which we issued last week on MDFO's Loan Project Financing.


Accessing loans from either Landbank or DBP has its advantages. Landbank absorbs the transaction costs associated with securing loans, while DBP offers 100\\% of the total project cost. In terms of computing the LGU's borrowing capacity, Landbank has its prescribed formula. At the same time, DBP follows the Bureau of Local Government Finance's debt ceiling, which is equivalent to 20\\% of the IRA.


2. Guidelines on the Release of the Funds for FY2020. Kindly take note of Section 3.4.3 on the financial assistance to LGUs, which needs to be disbursed until 31 December 2021 and Section 3.4.4 on the statutory shares of LGUs.


During the meeting, Secretary Avisado also shared that LGUs should look into Section 87 of the General Appropriations Act or on the Implementation of Nationally-Funded Projects. It states that LGUs may implement public works and infrastructure projects provided they have the capacity and are committed to funding the maintenance and repairs of these projects. Attached is a copy of Section 87 of the GAA.


For your information. Thank you.


Very truly yours,



Atty. Shereen Gail C. Yu-Pamintuan

Executive Director

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