BAGUIO CITY— Government-owned Landbank of the Philippines (LandBank) kicked-off on Friday a series of forum with fourth to sixth class municipalities from Regions 1, 2, 3 and the Cordillera, to aid small towns in passing the Seal of Good Local Governance (SGLG) and avail of the bank’s loans for development programs.
Joselito Gutierrez, LandBank Executive vice president for Agricultural and Development Lending sector, said on the sidelines of the event that ended late Friday afternoon that the bank specifically targets to help local government units.
“We are the natural partners of local government units for their deposit requirements and their loans,” he said.
The forum is aimed at getting inputs from the participating local governments on how the bank can help them and how they can pass the SGLG.
Gutierrez said that it is mandatory under the policies of the Department of the Interior and Local Government (DILG) and the Bureau of Local Government Finance (BLGF) that “quality” local governments be assisted by LandBank with loans.
“They have to have a Seal of Good Local Governance,” Gutierrez said. “We have to find a way to be able to help their constituents. In time, the financial inclusion program of the bank is to directly assist and bring financial product and services to the communities but we always look at the LGUs as a very potent, important partner.”
He said that if LGUS are able to provide the infrastructure to accelerate economic development, “then we will have an opportunity to help more of their constituents”.
Rowena Villanueva, LandBank First Vice President for Corporate Affairs, said the inputs from the group discussion will guide the bank in coming up with programs and allow more municipalities in the fourth to sixth class categories to avail of their services and loan facilities.
“The intention is financial inclusion in the sense that we wanted to engage the municipalities and to share the inclusive lending programs that we are making available to our LGU partners especially the municipalities who are not yet able to access them,” Villanueva said.
She said there are certain things that LGUs may not yet be aware of, that is why they brought in partners like the National Economic Development Authority (NEDA) and the Department of the Interior and Local Government help the LGUs perfect the requirement of the law, allowing them to access the financial programs of LandBank.
Importance of seal of good local governance
Filipina Monje, LandBank Senior Vice President for North and Central Luzon lending group, said the LGUs performance is measured by the SGLG.
“This is an incentive for them to ensure that they keep to the requirement of SGLG,” she said.
Florinda Garcia, local government operations officer V of the DILG-CAR said in her briefing that the SGLC is an indicator that an LGU is complying with governmental rules and policies, as well as the guidelines on spending, there is no corruption being done and that the officials are exerting effort to improve the lives of their constituents.
She cited the seven areas that an LGU must possess to be an SGLG passer: financial administration, disaster preparedness, social protection, peace and order, environmental management, ease of doing business and competitiveness and tourism, culture and arts.
As of 2018, there were 81 provinces, 145 cities and 1,489 municipalities that were assessed for SGLG.
She said that the government assesses and implements the SGLG to influence good governance behavior and local decision making; complement the Philippine Development Plan and upgrade governance standards.
Especially for the top notchers, they get to receive a marker, a performance challenge fund (PCF) or a cash award that the Landbank releases in the form of project assistance and certificate of recognition, that they can use to avail of the other benefits of being an SGLG awardee.
The guidelines of the DILG and the BLGF require that only LGUs that have passed the SGLG conducted by the DTI and the DILG can be extended a loan by the Landbank.
This requirement being mandatory, Gutierrez said, prompted them to conduct the forum to advise and help the LGUs to be able to meet the requirement and pass the SGLG.
“We want to reach more local governments,” he said.
Better loan packages for partners
Gutierrez said with the LGUs as partners, the biggest depository bank of all government agencies, LGUs and government-owned and controlled corporations (GOCC) can offer enticing packages.
“We are competitive based on market rates. The best officer that any private commercial bank can offer, Landbank can match.”
He added that “the way we price our loans, just like any other bank is based on prevailing market rates but we we set the lending rate. We have a credit rating system [for LGUs] which classifies our borrowers from prime all the way to satisfactory and even those lower than satisfactory can still avail of the loan.”
“When we negotiate our rates, even below the prevailing market rates, it is to their advantage because they are already our depositors,” adding “we are more than competitive, it can go as low as 1% below the prevailing,” Gutierrez said.
Monje also said that based on the borrowing capacity of the LGU and their Internal Revenue Allotment (IRA), the bank can give as high as PHP2 billion, depending on their project and capacity.
Most of the projects funded by the LandBank, she said, are construction of hospitals, solid waste management programs, school buildings, sanitary landfill, public market, “bagsakan center”, renewable energy and others.
“But the most sought after facility is to finance farm to market roads, machinery and equipment,”
She said that some small towns, which have minimal IRA and are qualified to avail of the loan, have opted to secure financial assistance from LandBank for purchase of dump trucks, which they can pay for several years using only a portion of their mandatory 20 percent development fund.
The officials encouraged the LGUs to see the guidelines set by the DILG and the DTI for them to be able to pass the SGLG and avail of the benefits provided by the government-owned LandBank. (Liza Agoot/PNA)
