BUREAU OF LOCAL GOVERNMENT FINANCE

2016 Accomplishment

The Bureau of Local Government Finance (BLGF), being the focal agency and authority in local
finance, continues to support and advocate policy initiatives that will further enhance local
government units’ (LGUs) fiscal management, collection enforcement and financial performance.

For the past year, BLGF’s strategies were focused on continuing good governance reforms through
resource mobilization programs, good governance and transparency initiatives, implementation of
special projects, enhancement of existing systems, networking and linking with international
partners and capacity development programs for BLGF and LGUs.

RESOURCE MOBILIZATION AND REVENUE GENERATION

Local Government Units

Consolidated LGU Financial Performance

The Bureau, through its Revenue Generation Program provides LGUs with technical assistance in
implementing tax collection enforcement programs and strategies aimed at improving their
performances in generating locally sourced income which includes updating of Local Revenue
Codes, Schedule of Market Values, credit financing schemes, improved financial reporting system,
among others.

As of 3rd quarter of 2016, local governments’ total revenues reached Php430.89B which is five
percent higher than the 2015 – Q3 collection. Of this, Php271.41B or 63% came from external
sources which is comprised of internal revenue allotment (IRA), other shares from national tax
collections, inter-local transfer and grants/donations, Php144.30B or 34% came from local sources
or the tax and non-tax revenues and the Php15.19B or 3% came from loans and borrowings, and
other non-income receipts.

Tax revenues and non-tax revenues contributed 25% and 9%, respectively to the total LGU
revenues from local sources.

Loans and Other Non-

Borrowings, 2% Income
Receipts, 1%

Tax Revenues,
25%

External
Sources, 63%

Non-Tax
Revenues, 9%

Figure 1. Sources of LGU Revenues

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Table 1. Historical LGU Income and Expenditures (In Billion Php)
PARTICULARS 2012 2013 2014 2015 2016*
Revenues 376.79 402.45 448.95 533.24 430.89
Local Sources 132.28 135.18 151.36 172.34 144.35
Tax Revenues 92.87 96.33 108.22 122.28 105.42
Non-Tax Revenues 39.41 38.85 43.14 50.06 38.93
External Sources 235.63 254.38 283.33 336.92 271.41
Loans and Borrowings 7.80 10.49 8.59 12.75 8.48
Other Non-Income Receipts 1.08 2.40 5.68 11.23 6.64
Expenditures 330.08 349.89 368.13 407.13 274.30
Operating Expenditures 277.97 293.36 300.24 326.01 224.35
Non-operating Expenditures 37.43 41.05 51.14 64.95 39.16
Debt Service (Principal + Interest) 14.69 15.48 16.75 16.17 10.78
Net Increase/Decrease in Funds 46.70 52.56 80.83 126.12 156.59
Surplus1 53.59 57.55 88.99 129.54 158.89
rd
*As of 3 Quarter of FY 2016

For the tax revenues, the tax on business and other taxes accounted for the highest contribution at
61% as compared to the 39% shares from real property tax. On the other hand, for the non-tax
revenues, fees and charges reported the highest contribution at 52%, followed by income from
economic enterprises and other receipts at 39% and 9%, respectively.

Among the LGU types, cities generated the highest total revenues of Php187.03B, followed by
municipalities with Php143.71B and provinces with Php100.14B.

Table 2. LGU Revenues by LGU Type (FY 2016 – Q3) in Billions

Particulars Province City Municipality
Local Sources 16.87 101.54 25.94
IRA 73.06 73.45 105.89
Other External Sources 4.57 6.84 7.62
Receipts from Loans and 3.41 2.99 2.08
Borrowings
Other Non-Income Receipts 2.24 2.22 2.18
Total 100.14 187.03 143.71

Cities are the most self-sufficient with 54% of their revenues coming from local sources (see Figure
2); only 39% were contributed by IRA and the remaining 7% from other revenue sources.
Meanwhile, for the provinces and municipalities, the national transfers or IRA have continuously
overshadowed the local revenue performance, contributing 73% and 74% of their total revenues,
respectively.
Other
External Other
Sources, Receipts External
4.6% from Loans IRA, 39% Sources, 4%
Receipts
and from Loans
Borrowings, and
IRA, 73% 3.4% Borrowings,
Local Other Non- 1.6%
Income Other Non-
Sources,
Receipts, Income
17% Local
2.2% Receipts,
Sources, 1.2%
54%

1
Surplus (Adjusted for Consolidated Public Sector Financial Position) = Net Increase/Decrease in Funds - Loans and
Borrowings + Debt Service
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 Figure 2. Revenue Sources of Provinces Figure 3. Revenue Sources of Cities

Other External
Sources, 5.3%
Receipts from
Loans and
Borrowings,
1.5%
Other Non-
IRA, 74% Income
Local Sources, Receipts, 1.5%
18%

Figure 4. Revenue Sources of Municipalities

Through the years, local revenues barely reached a little over 1% of the country’s GDP. However,
in 2015, local efforts resulted in 1.06% to GDP ratio. As of FY2016 Q3, the ratio has reached already
1.36% of GDP.

On the current operating expenditures, large percentage LGUs expenses went to General Public
Services (54%), followed by Economic Services (18%), Health, Nutrition and Population Control
(12%), Social Services and Social Welfare (7%), and other sectors with 9%.

18%
General Public Services
7% 1%
3… Department of Education
0%
Health, Nutrition & Population
Control

12% Labor & Employment

Housing & Community Development

5%
Social Services & Social Welfare
54%
Economic Services

Figure 5. LGUs Expenditure Profile

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 GOVERNANCE AND TRANSPARENCY INITIATIVES

Streamlining of Documentary Requirements in the Issuance of Certification of Net Debt

Service Ceiling and Borrowing Capacity of LGUs

In line with the President’s inaugural and SONA instruction to streamline government requirements,
Department Order No. 54-2016 (25 October 2016) was issued to streamline the certification of Net
Debt Service Ceiling and Borrowing Capacity (NDSC BC) of Local Government Units. The Order
simplified and reduced the number of documentary requirements from 12 to 4. The Certification is
effective up to 1-year and for disaster-stricken LGUs, up to 2-years after issuance. The BLGF has
also delegated the review and certification of the completeness of loan documents to the Regional
Offices for easier coordination.

For timely and accurate monitoring of LGU loans and borrowings, the Local Treasurer shall submit
a Statement of Indebtedness, Payments and Balances (SIPB) setting out the details of each loan
as specified, within 10 days after approval of the loan and to update and submit statement on an
annual basis.

Number of Certificates of NDSC and BC Issued

By LGU Type, FY 2016
2016
LGU Type
Number Percent Distribution
City 25 14%
Municipality 128 72%
Province 14 8%
Barangay 10 6%
Total 121 100%

Number of Certificates of NDSC and BC Issued

By Region, FY 2016
2016
Region
Number Percent Distribution
CAR 2 1%
CARAGA 7 4%
NCR 5 3%
Region I 7 4%
Region II 9 5%
Region III 21 12%
Region IV-A 17 10%
Region IV-B 8 5%
Region V 10 6%
Region VI 12 7%
Region VII 9 5%
Region VIII 20 11%
Region IX 10 6%
Region X 19 11%
Region XI 7 4%
Region XII 14 8%
Total 177 100%

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Source: BLGF, Local Debt Monitoring and Evaluation Division (LDMED) 2016

Number of Certificates of NDSC and BC Issued

By Income Class, FY 2016
2016
Income Class
Number Percent Distribution
1st 57 32%
2nd 26 15%
3rd 27 15%
4th 39 22%
5th 17 10%
6th 1 1%
Barangay 10 6%
Total 121 100%
Source: BLGF, Local Debt Monitoring and Evaluation Division (LDMED) 2016

SPECIAL PROJECTS

Public Financial Management

Under the EU-funded LGU PFM 2 Project, the DOF thru the BLGF joined the DILG, DBM and NEDA
in signing the Joint Memorandum Circular No. 1-2016 setting the framework and policy for a more
coordinated approach towards improving local government units’ public financial management in
ensuring harmonized and synchronized policies, systems and procedures in planning, budgeting,
investment programming, and resource mobilization in coordination in fiscal oversight pursuant to
the mandated functions under the Local Government Code (LGC) of 1991.

Environment and Natural Resources Data in the Electronic Statement of Receipts and
Expenditures System for Local Treasurers (ENRDMT)

In commitment to promote transparency and good governance in managing the country’s natural
resources, the Secretary thru the BLGF issued Department Order 49.2016 (05 September 2016)
for the inclusion of Environment and Natural Resources Data in the Electronic Statement of
Receipts and Expenditures System for Local Treasurers. The BLGF, in coordination with Philippines
Extractive Industries Transparency Initiative (PH-EITI), provided technical and funding support thru

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the PPEI in the development of Environment and Natural Resources Data Management Tool
(ENRDMT), a web-based data management tool that captures greater granularity information on:

(1) Direct payments made to LGUs by extractive industries under the national statutes and
local tax codes; and
(2) Mandatory and other expenditures coming from LGU receipts/collections from the
extractive industries.

The Bureau received the PH-EITI Transparency Award in recognition for significant contribution in
the inclusion of ENRDMT data in the eSRE.

Web Presence and Online Services

To prove effectivity of our efforts, the BLGF has been hailed by the ABS-CBN Investigative and
Research Group as 1 of the 10 government agencies providing prompt data on digital format for
free. Our local and foreign development partners have praised the website as a wealth of
information on local fiscal data particularly facts and figures from the eSRE.

http://blgf.gov.ph/blgf-hailed-by-abs-cbn-as-one-of-the-ten-10-government-agencies-providing-
prompt-data-on-digital-format-for-free/
Further, in compliance with the government’s directive to improve transparency and good
governance in local fiscal and financial management through effective web presence and online
services, the Bureau’s enhanced website - www.blgf.gov.ph now includes popular social media link
via Facebook. The Facebook page launched during the Bureau’s 29th Anniversary contains all
relevant and accurate information to enable local governments, stakeholders and the public to lodge
queries and concerns online, access a databank of issuances and news updates.

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 CAPACITY DEVELOPMENT FOR LGUs

Continuing Professional Development (CPD) of Local Assessors

The BLGF regularly offers CPD programs accredited by the Professional Regulation Commission
(PRC) on: (1) Philippine Valuation Standards (PVS); (2) Basic Course on Mass Appraisal (BCMA)
and (3) Skills Development in SMV Updating and Conduct of General Revision. These CPD courses
aim to improve the valuation and assessment operation in the LGUs further enhancing knowledge
and skills at par with internationally-accepted valuation principles, techniques and applications.
Trainings on Philippine Valuation Standards were conducted for Local Assessors.

Capacity Developments for BLGF Central and Regional Personnel

The BLGF conducted Training on Leadership and Management and Training on Facilitation and
Presentation Skills, Brown Bag Session on Statistical Analysis and Local Finance, Training on
Government Accounting Manual, Writeshop on Administrative Discipline and Non-Disciplinary
Proceedings.

The Bureau conducted and initiated forums, seminars, training and refresher course on the
following topics:
o PAG-IBIG Mini-Symposium
o GSIS Mini-Symposium
o PhilHealth Mini-Symposium
o TWAD and GAD (in coordination with Legal Service)
o Personnel and Document Security
o Orientation Seminar for OJTs
o GAM Training
o CY 2016 Mid-Year Assessment
o Quarterly Directors Conference
o Office Productivity (2 Batches)
o PHP Programming
o Website Development
o Procurement RA 9184 Workshop
o PSA Convention
o Disaster Risk Reduction Management Seminars

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We also participated in NGA sponsored activities, seminars and training and other activities:

o DBM/COA Unified Reporting System

o Leave Administrative Course for Effectiveness
o CSC HR Practitioner Symposium
o Preparation of APP
o Updating of R.A. 9184
o PBB 2016 Orientation
o PAGBA Seminar
o CSC Fun Run
o Celebration of Elderly Week
o Kalayaan 2016 Fun Run
o Rizal Day

Brown Bag Session

In answer to DOF’s Friday Learning Session, the Bureau started the Brown Bag session starting
with the celebration of the 27th National Statistics Month in line with the theme “Sustainable
Development: Making Statistics Count”. The first Brown Bag Session focused on Statistical
Analysis and Local Finance and was held on 20 October 2016. The statistical training was designed
for and participated by the BLGF central and regional personnel whose duties and functions require
skills in processing and analyzing statistical data. The training covered following topics: (1)
Introduction to Statistics; (2) Summary Statistics; (3) Presentation of Data; (4) Steps in Writing a
Statistical Report; and (5) Effective Writing and Presentation of Statistical Reports.

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Participants to the 1st Brown Bag Session on Statistical Analysis and Local Finance held last 20 October 2016 at the
DOF-BLGF Training Room

Cluster Training for the Provincial Roll-Out of LGU Integrated Financial Tools (LIFT)

The BLGF in cooperation with the Asian Development Bank (ADB) conducted three (3) Cluster
Trainings for the Provincial Roll-out of LGU Integrated Financial Tools (LIFT) to Regions II, III, V,
VII, VIII and IX in November 2016 at the Bayview Park Hotel, Manila.

LIFT is a web-based system that will serve as a portal to synchronize the financial reporting
requirements for the LGUs of the oversight agencies (DILG-NEDA-DBM-DOF). The enhancement
and improvement of the computerized fiscal database systems of oversight agencies and of the
public financial management e-tools for LGUs was funded by the European Union (EU) through the
Support to the Local Government Units for More Effective and Accountable Public Financial
Management (LGU PFM 2) Project.

The financial managers of the provinces (Accountant, Budget Officer, Treasurer and Budget Officer)
and their focal persons were invited to participate in the training to capacitate them and enhance
the skills of the provincial LIFT focal persons in the deployment, use and roll-out of the enhanced
and improved computerized fiscal database systems to their cities and municipalities.

Standardized Examination and Assessment for Local Treasury Service

Another important policy issued by the DOF to professionalize the treasurers is Department Order
53.2016 (20 October 2016) establishing and institutionalizing the Standardized Examination and
Assessment for Local Treasury Service (SEAL) Program. It promotes the continuous professional
development of the local treasury service and to develop a corps of competent and qualified local
treasury officials who demonstrate and perform their functions with the highest degree of
excellence, integrity, professionalism, and ethical orientation. The SEAL Program is a three-level
competency certification program intended to measure the following:

1. SEAL 1 Certification: Tactical-Operational Competencies. This is applicable to all

provincial, city and municipal treasurers and assistant treasurers regardless of LGU income
classification. This is also open to any interested applicant who intends to join the local
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 treasury service and the qualifications set under Section 470 and 471 of the LGC shall not
be a requirement in applying for the said examination;

2. SEAL 2 Certification: Strategic-Managerial Competencies. This is primarily intended for

local treasurers and assistant treasurers in 1st, 2nd and 3rd Income Class Provinces, Cities
and Municipalities. Seal 1 Certification shall be a pre-requisite in taking up SEAL 2; and

3. SEAL 3 Certification: Leading for Innovation Competencies. This is suited for treasurers
and assistant treasurers of Special, 1st Class and Highly Urbanized Cities, and 1st Income
Class Provinces. This program shall only be open to those certified under SEAL 2;

The SEAL Certification/s shall form part of the criteria in evaluating and selecting recommendees
for appointment and designation, and the corresponding weights are given for each level.

COOPERATON AND INTERNATIONAL PARTNERSHIP

Inter-Agency Cooperation

As part of our networking with local and international partners, the Bureau has been sharing the
efforts of the government on local governance.

We shared with other national government agencies impact of business tax administration at the
National LGU Information and Communication Technology (ICT) Forum. Recently, we offered our
expertise at the ARMM LGU Forum to capacitate local treasurers on local fiscal management.

The Department thru the BLGF collaborate on activities relative to Ease of Doing Business in the
enhancement of the Business Permits and Licensing System (BPLS) after issuance of DILG-DTI-
DICT Joint Memorandum Circular 01 series of 2016 (30 August 2016). The Bureau commits thru
the Treasurers and Assistant Treasurers to complement and unify forms, documentary
requirements, assessment, processing time in the issuance of business permits and licenses and
to ensure that submission of progress and period report will be properly and strictly complied.

The BLGF rendered technical assistance to the MDFO for the Performance Based Grant System
(PBGS) under Agrarian Reform Communities Project 2 (ARCP2) covering 41 LGUs.

At the National LGU Information and Communication Technology (ICT) Forum, OIC Executive Director Niño Raymond B.
Alvina discussed Business Application Revenue: Emerging Major Source of Local Income highlighting the progress and
impact of business tax administration.

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We also strengthened linkage with legislators, stakeholders and development partners to pursue
our policy and legislative priorities.

International Cooperation

The ENRDMT has been featured at the Green Fiscal Policy Network Workshop in Thailand wherein
we shared country experiences with natural resource revenue, management and governance for
the Third Regional Workshop on Financing for Sustainable Development Goals (SDGs): The Role
of Fiscal Reforms, Revenue Management and Sovereign Wealth Funds in the Extractives Sector.
The event was organized by the UN Environment (UNEP) together with the International Monetary
Fund (IMF) and the German Development Cooperation Agency (GIZ), in collaboration with UNDP-
UNEP Poverty Environment Initiative Asia-Pacific.

The BLGF participated as a panelist on managing investments in natural resources through the
ENRDMT during the PEI Regional Meeting held at Dhaka Bangladesh in June. The objective of
the meeting is to showcase to other member countries the tool developed by the Philippines through
UNDP funding for monitoring LGU resources and investments on projects focused on poverty
reduction initiatives.

At the Asian Public Governance Forum of Local Finance Shared our experiences in achieving fiscal
sustainability of local governments was the focus of our participation at the OECD KPC in Incheon,
South Korea.

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Officials of the OECD KPC visited BLGF for the co-hosting of the 3rd Asian Public Finance
Management Forum on June 2017 to be participated by 30 Local Finance Experts from Asia Pacific
countries.

The Department issued Personnel Order No. 446-2016 approved creation of the Project
Management Structure for the Mainstreaming Voluntary Guidelines on Governance Tenure (VGGT)
funded by Food and Agriculture Organization of the United Nations (UN-FAO), wherein the BLGF
is tasked to update the Philippine Valuation Standards.

The Bureau also welcomed visiting Bhutan Officials and shared experiences of inter-government
fiscal transfers as part of our efforts to link with the international community.

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