Transcript Local Government Finance in the Philippines

Local Government Finance in
the Philippines
Milwida M. Guevara
Synergeia
www.synergeia.org.ph
The Philippines
• 2,100 islands
• 76.5 million people
in 2000; 2.4 per cent growth annually (88.7
million by July 2007)
• 38 percent urban estimated to increase to
82 percent in 2020
Our Local Governments
Provinces
81
Municipalities
1,510
Highly
Urbanized
Cities
33
Component
Cities
85
Barangay
Barangays
41,994
Barangays
41,994
Who does what?
• Provinces: Hospital and tertiary health services;
Low cost housing; telecommunications; Infra
from local funds; social welfare services
• Municipalities: Primary health care; school
building; solid waste disposal; cultural centers,
parks, tourism facilities
• Barangay (Village) : health center, day care, solid
waste collection, reading center
• Cities: All of the above
Vertical Fiscal Imbalance
Revenues and Expenditure Shares of Central and Local
Governments, 2004
120
100
80
Local
60
Central
40
20
0
1
2
Local
8.1
20.48
Central
91.9
79.52
Revenues
Expenditures
LGU revenues do not match their expenditures.
Financial Dependence of LGUs on
Central Government
Percent to total
Revenues of
LGUs
Grants and Revenues of Local
Percent of
Governments
grants to total
80
60
40
20
0
1989 1993 1997 2002
Year
revenues of
LGUs
Percent of local
sources to total
revenues of
LGUs
Percent of real
property tax to
total revenues of
LGUs
Percent of
business taxes
to total revenues
of LGUs
The Road to a Robust Local
Finance
• Definition of Minimum standards for
public services, e.g. P10,000 per
elementary student
• Grant system that equalizes needs and
resources
• Productive, flat and simple to administer
local taxes
• Systems and processes that promote tax
compliance and transparency
Out of the Box Strategies—Policy
framework that supports:
• Public-private sector partnerships
• Development of a credit market
* Special Purpose Vehicles
* Bond financing
* Credit rating for LGUs
* Local Government Guarantee Corporation
* Municipal/City Banks?
• Municipal Development fund for less capable
LGUs