TA No. 4556-PHI: PHILIPPINES LOCAL GOVERNMENT FINANCE AND BUDGET REFORM


Executing Agency:
Department of Finance
Contact Person: Mr. Roberto Tan, Undersecretary

TA Amount: (US$'000): 850.00

Objectives and Scope:

The 1991 Local Government Code (LGC) was an ambitious attempt to expand the political and economic role of local government units (LGUs). A large portion of national government spending responsibilities was devolved, and the portion of national government revenues flowing to LGUs through intergovernmental transfers was more than doubled to fund that spending. This was seen as a means of bringing government service delivery closer to its end users and as a major step to strengthen democracy, by making LGUs more autonomous, transparent, and accountable. However, after 14 years the LGC's compelling vision has been only partially realized, and LGUs-with few exceptions-are not yet playing their anticipated role. Urgent problems relating to core LGU budget functions are the greatest impediment to LGUs' ability to be effective and accountable.

The goal of this TA is to support restructuring and capacity development of key National Government Agencies (NGAs) that are engaged in building LGU access to financial resources and in training LGU officials in budget management. The TA will facilitate effective delivery of assistance by the Bureau of Local Government Finance (BLGF) of the Department of Finance (DOF), the Local Government Academy (LGA) of the Department of Interior and Local Government (DILG) and the Municipal Finance Corporation (MFC), a newly established state-owned lending institution. The major outputs will be; (i) strengthened capacity and systems in the BLGF, the key national government agency providing support to LGUs in resource mobilization and treasury functions, and; (ii) a streamlining of the capacity building functions within the DILG, and upgrading of LGU fiscal management training programs in the LGA; (iii) the operationalization of the MFC.

Consulting Services:

The TA will require approximately 18 person-months of international and 75 person-months of domestic consultants with expertise in local government finance, debt and credit management, public finance economics, fiscal policy, local government taxation, local government administration, and public administration law. The TA will be implemented over 18 months, from January 2006 to July, 2007. Policy dialogue and consultation will be carried out with public institutions, the private sector, and other aid agencies. Training materials will be prepared as required. Assistance to each of the beneficiary NGAs will compromise a project component, and in each component consultants will prepare an action plan upon commencement of work and report monthly on progress in achieving its benchmarks.

The consultants are to be engaged as a firm by ADB in accordance with ADB's Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants, using the simplified technical proposals procedures under ADB's quality- and cost-based system. Equipment will be procured in accordance with ADB's Guidelines for Procurement.

Project Processing Stage: Approved by the Bank on 23 December 2004.

Recruitment of Consultants: The short listing is scheduled in late November. Expression of interest is open until November 15.

Project Officer:

William G. Bikales (632-5846)
Office of the Director General, SERD
Email: wbikales@adb.org