Philippines, France to seal 100 million euro program loan

November 1, 2017

The Philippines will soon sign an agreement with Agence Française de Développement (AFD) of France for a 100 million euro (equivalent to around $115 million) loan to support the Local Government Finance and Fiscal Decentralization Reform Program, Sub-program 2 (LGFFDR2).

The LGFFDR2 is a program loan that is part of the national government’s external financing program to partially support the general budgetary requirements for the same year.

It is being co-financed by AFD and the Asian Development Bank (ADB), with the latter providing $250 million.

In a report to Finance Secretary Carlos Dominguez III during a recent Department of Finance (DOF) Executive Committee (Execom) meeting, the DOF-International Finance Group said the  EUR100 million program loan from AFD is proposed to be extended to the NG in recognition of the latter’s efforts to achieve inclusive growth and reduce poverty by (i) creating a conducive fiscal framework for inclusive growth; (ii) developing an adequate and equitable resource framework for fiscal sustainability; (iii) strengthening public financial management to assist efficient local government unit service delivery; and (iv) fostering good local governance, transparency and accountability.

The IFG said the target disbursement for the AFD-loan, if it is signed on schedule, is either in the fourth quarter of this year or the first quarter of 2018.

It reported to Dominguez that the LGFFDR2 aims to achieve inclusive growth and reduce poverty via improved service delivery by local governments units (LGUs), through (i) proposed revision of the 1991 local government code and the creation of a conducive fiscal framework for inclusive growth, the development of an adequate and equitable resource framework;(ii) strengthening of public financial management for efficient LGU service delivery; and (iii) reinforcement of good local governance, transparency and accountability. DMS