DOF-BLGF certifies Yolanda LGUs’ capacity for P1.8B own-loan financing bids

DOF-BLGF certifies Yolanda LGUs’ capacity for P1.8B own-loan financing bids

DOF simplifies debt ceiling certification requirements for Yolanda-affected LGUs

 

The Department of Finance-Bureau of Local Government Finance has approved the certification of borrowing capacity for the P1.8 billion loan applications of local government units (LGUs) affected by Typhoon Yolanda from January to May 2014.

Of the 13 applications from Yolanda LGUs received by the DOF’s Bureau of Local Government Finance (BLGF) during the first quarter of 2014, 11 have already been approved and issued by BLGF.

The move is to ensure that other options for financing and fund mobilization, such as domestic borrowing, are immediately available for post-Yolanda recovery and rehabilitation programs, in addition to projects already being implemented by the National Government, as well as to fund previously proposed capital investment projects.

The BLGF certifies an LGU’s debt servicing ceiling (DSC) and net borrowing capacity (NBC) as a requirement of the Monetary Board of the Bangko Sentral ng Pilipinas in granting prior opinion on proposed LGU borrowings, as mandated under Sec. 123 of the New Central Bank Act of 1993.

The Province of Palawan is set to receive already the P1.2 billion loan from the DOF’s Municipal Development Fund Office (MDFO) through its Disaster Management Assistance Facility, the biggest thus far certified by BLGF in 2014, to finance the procurement of heavy construction equipment for the repair and rehabilitation of public infrastructures and areas devastated by Typhoon Yolanda.

Among those issued already with DSC and NBC certificates, but are still pending for final approval by the Monetary Board and the concerned government banks, are the loan applications with the Development Bank of the Philippines (DBP) of the provinces of Southern Leyte for P250 million for the construction and improvement of farm-to-market roads and hospital building, and Negros Occidental for the P157.5 million construction of cyber center building.

Also approved were the applications with the Land Bank of the Philippines (LBP) of the municipalities of Lambunao, Iloilo (P21 million loan for farm-to-market road and heavy equipment); Pilar, Capiz (P20 million loan for construction of public market); and Banate, Iloilo (P16 million for the procurement of heavy equipment).

Other applications with LBP that have been certified by the BLGF are from the municipality of Makato, Aklan (P4 million for the construction of multi-purpose building) and Passi City (P33 million for the improvement of city hall).

The certification for Municipality of Banga, Aklan for a P50 million loan with Philippine Veterans Bank for the procurement of heavy equipment, and for the proposed P47 million loan of the municipality of Salcedo, Eastern Samar with the MDFO were likewise approved by BLGF.

After an LGU loan application is certified as to the NBC and DSC, the proponent LGU then requests for the prior opinion and approval of the Monetary Board before the amount is finally approved and released by the authorized lending institution.

Recently, the Province of Aklan has received already P2.1 million out of the approved Php200 million loan with the LBP for the repair of various government buildings.

The NBC is the maximum loanable amount for a given period of time and interest rate given an LGU’s annual 20 percent DSC, which is the limitation set under Sec. 324(b) of the Local Government Code on how much can be appropriated for debt service from an LGU’s annual regular income.

 

Faster processing

Other Yolanda LGUs would benefit from faster processing as Finance Secretary Cesar Purisima already instructed to reduce the documentary requirements and hasten the review and approval by BLGF.

Reports have reached the DOF that Yolanda LGUs have difficulty complying with the original 12 documents required under LFC No. 1-2012 issued in 2012, as the documents have been damaged already and may be difficult to source from other government agencies also affected in their localities.

Under the new Local Finance Circular (LFC) No. 01-2014, only the following four documents will be required for evaluation by BLGF:

1.    Letter-request from the Local Chief Executive (Governor/Mayor) indicating: (i) the selected lending institution; (ii) terms and condition of the proposed loan (repayment period and interest rate); and, (iii) the specific purpose of the loan;

2.    Certification on absence or existence of approved loans per LFC No. 1-2012;

3.    Authenticated copy of the Resolution/Ordinance authorizing the local chief executive to negotiate and contract a loan in behalf of the LGU; and

4.    Certification from the lending institution that it shall not be requiring LGU deposits as compensating balance for the loan, if such lending institution is (i) not an authorized government depository bank, or (ii) an authorized government depository bank required to obtain the prior approval of the DOF per Department Order No. 27-05.

The circular, however, covers only applications from LGUs affected by Typhoon Yolanda, as certified by the National Disaster Risk Reduction and Management Council.

The revised rules would only be effective for one year, but the certification that will be issued by the BLGF for Yolanda LGUs will be valid up to two years from the date of issuance to allow time for LGUs to consider priority projects and best financing terms.

Other LGUs intending to secure certification from the BLGF are still required to comply with the full documentary requirements under LFC No. 1-2012.

The circular further instructs the concerned local treasurers to report the details of the financing facility within 10 days from approval of applications to the BLGF for monitoring purposes.

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DOF surges ahead in anti-corruption project

DOF surges ahead in anti-corruption project

                                                                                          

The Department of Finance (DOF), together with the Ateneo School of Government (ASoG), launched the second phase of Project LAYA in a low-key gathering on May 14. Project LAYA is geared towards the improvement of the anti-corruption and revenue collection efforts of the government through a technical working group that provides guidance in improving internal mechanisms in the prosecution of graft and corruption cases relating to the DOF and its attached agencies and regulatory enforcement. The project continues to phase two with increased capabilities, resources, and a wider scope that will further drive progress towards achieving DOF’s performance targets for 2014. The project is funded by a grant of US$200,000 from USAID under its Integrity Investments Initiative (i3) Program and is administered by Deloitte Consulting LLP.

Project LAYA is composed of a special team of legal and policy consultants who evaluate the internal processes of the DOF and its attached agencies, identify pertinent issues in the Department, and assist in handling and managing regulatory enforcement and anti-corruption initiatives.

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DOF seeks to include fiscal sustainability in issuance of DILG Seal of Good Local Governance

DOF seeks to include fiscal sustainability in issuance

of DILG Seal of Good Local Governance

 

The Department of Finance (DOF) has requested the Department of the Interior and Local Government (DILG) to include the fiscal sustainability rating of local government units (LGUs) as one of the criteria for the issuance of the LGU Seal of Good Local Governance.

In assessing the “good financial housekeeping” criterion for an LGU, the DOF has called on the DILG to consider the results of the annual LGU Fiscal Sustainability Scorecard and the settlement of all trust liabilities and obligations, as part of the full disclosure policy.

The DILG awards LGUs said seal if they satisfy the three core criteria which are good financial housekeeping, disaster preparedness, and social protection, and one of the three other criteria which are business friendliness and competitiveness, environment management, and peace and order.

Recently, the DOF conducted its own performance assessment of LGUs via the LGU Fiscal Sustainability Scorecard, instituted by its Fiscal Intelligence Unit (FIU) and the Bureau of Local Government Finance (BLGF).

Such an assessment monitors revenue generation capacity, local collection growth, expenditure management, updating of the Schedule of Market Values, and reportorial compliance of treasurers and assessors with the DOF and BLGF.

The development of the Fiscal Sustainability Scorecard is one of the reform initiatives undertaken by the DOF-BLGF to use data to drive performance and explore key opportunities in local fiscal management.

The DOF has reviewed the fiscal performance of at least 80 provinces and 121 cities for fiscal years 2009 to 2012. The DOF has also finished the processing of more than 1,400 municipalities and newly created cities with approved Statement of Receipts and Expenditures (SRE) reports.

The DOF will start assessing performance for fiscal year 2013 by June, with additional indicators in expenditure management.

The results of the performance assessment are published in Iskor ng ‘yong Bayan via http://iskor.blgf.gov.ph.

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PDIC advises borrowers of Cavite Rural Banking Corporation to pay their obligations

PDIC advises borrowers of Cavite Rural Banking Corporation to pay their obligations

The Philippine Deposit Insurance Corporation (PDIC), the Receiver of the closed Cavite Rural Banking Corporation, reminded borrowers of the bank to continue to pay their loans and transact only with authorized PDIC representatives. 

In a statement, PDIC advised borrowers of the Cavite Rural Banking Corporation to pay their loans and other obligations directly at any Philippine National Bank (PNB) Branch under account name, PDIC BURL FAO CAVITE RURAL BANKING CORPORATION.  The Receiver cautioned borrowers that it has discontinued the engagement of the bank’s collectors.  PDIC has not engaged any person to collect the loans of the bank.  To ensure proper recording of payments made by borrowers, it further advised borrowers to keep copies of the PNB Deposit/Payment Slips.  The Receiver emphasized that only payments with validated PNB Deposit/Payment Slips shall be considered valid payments.  Official receipts will be issued by PDIC upon validation of payments.  For proper accounting of their payments, borrowers who do not receive their official receipts are advised to send a copy of their deposit slips by mail to the Deputy Receiver for loans Benefico M. Magday at the PDIC Office, 5th Floor, SSS Bldg., Ayala Avenue corner V.A. Rufino St., Makati City or send via e-mail to Mr. Magday at bmmagday@pdic.gov.ph or to Ms. Bettina Acosta atbnacosta@pdic.gov.ph.

The Monetary Board (MB) placed the Cavite Rural Banking Corporation under the receivership of the Philippine Deposit Insurance Corporation (PDIC) by virtue of MB Resolution No. 706.A dated May 9, 2014. As Receiver, PDIC took over the bank on the same day.  Upon takeover, all bank records were gathered, verified and validated. 

Cavite Rural Banking Corporation is a four-unit rural bank with Head Office located at M.H. del Pilar St. corner Kiamzon St., Silang, Cavite.  It has two branches located in Amadeo and one branch in Silang, all in Cavite.

Borrowers of the bank may also communicate with the PDIC – Loans Management Department III at (02) 841-4970 or 841-4974.  Queries may also be sent through email at pad@pdic.gov.ph.

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DOF extends application period for importer and broker accreditation

DOF extends application period for importer and broker accreditation

Extension applies only to importers and brokers with valid and existing accreditation

The DOF extended the application period for importers and brokers with valid and existing accreditation to 30 June 2014, or the original expiration of their BOC accreditation, whichever comes earlier.

Under Department Order No. 33-2014, failure to file the proper and complete application by the above-stated date will result in the automatic cancellation of such accreditation, effective 1 July 2014, or the date of expiration as indicated in the accreditation, whichever is earlier.

The Order was issued is to give importers and brokers with valid and existing accreditation, ample time to fulfill the accreditation requirements.

As one of the priority reforms instituted under the Customs Reform program, importers and brokers were required to get an importer clearance certificate (ICC) or broker clearance certificate (BCC) from the Bureau of Internal Revenue prior to being accredited by the Bureau of Customs.

The Bureau of Customs and the Bureau of Internal Revenue shall release specific guidelines and memorandum orders implementing DO 33-2014.

Attachment: Department Order No. 33-2014

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