Strengthening the autonomy and competences of local authorities is one of the priorities of the Government of the Philippines, which is aware of the strategic importance of decentralization for an archipelago consisting of over 7,000 islands, comprising over 40,000 local authorities, and marked by strong regional disparities. However, local authorities remain highly dependent on State transfers, and the increase in their financial resources does not match needs in terms of urban infrastructure.
Given the country’s exposure to natural disasters, local authorities are also at the forefront of natural risk management and climate change adaptation. Following on from its initial support for the implementation of the Local Government Finance and Budget Reform Program (LGFBR, EUR 150m loan), AFD is renewing its support to the Government of the Philippines to increase local authorities’ budgetary capacities.
Building on an ongoing dialogue on the decentralization process initiated back in 2009, the Government of the Philippines has benefited from a second AFD loan for USD 150m. This loan is the result of the significant progress achieved in financial management between 2010 and 2013, following the first program to support decentralization, cofinanced by the Asian Development Bank and AFD.
The new loan, allocated to support the Local Government Finance and Fiscal Decentralization Program (LGFFD), primarily aims to improve and balance the distribution of financial resources at local level, strengthen public finance management, and develop governance, transparency and accountability in local authorities. This loan is combined with EUR 4.8m of technical assistance, subsidized by the European Union, which aims to improve the disaster resilience of local authorities.
- Institutional: through a development of the institutional and financial regulatory system and framework for decentralization, a strengthening of local authority management tools, and improved local governance with greater civil society participation
- Economic: by creating dynamics for public expenditure for the local development of the economy and activity
- Social: a strengthening of inclusive growth, thanks to the improvement in the effectiveness and equity of basic services under the responsibility of local authorities
- Environmental: via incentives to take greater account of natural disaster risks and climate change adaptation in local investment policies and programs
on the same regionInfrastructureSustainable CitiesSustainable CitiesClimate
on the same topicInfrastructureSustainable CitiesSustainable Cities
on the same financial toolInfrastructureWater and SanitationInfrastructure