World Bank flags ‘Mandanas Ruling’ risk

Published June 11, 2021, 7:30 AM

by Chino S. Leyco

The World Bank has expressed fear that the forthcoming transfer of some national government’s responsibilities to local executives may hamper the delivery of basic services to the public.

In a statement released by the Washington-based financial institution on Thursday, June 10, the bank noted that “the government faces a significant risk” in the initial implementation of the so-called Mandanas-Garcia ruling beginning next year.

World Bank said the transition process, which also involves higher internal revenue allotment (IRA) share of local government units (LGUs) beginning in 2022, could lead to a large gap in service delivery.

As early as now, World Bank pointed out that some local governments have started raising concerns regarding the additional devolved functions, services and facilities that they need to assume.

World Bank added that underspending by local governments may worsen, as many LGUs do not have the capacity to absorb full autonomy in planning and managing the additional resources from the Mandanas-Garcia Ruling.

President Duterte already signed Executive Order No. 138 that facilitates the full devolution of basic services and facilities from the national government to LGUs, in compliance with the Mandanas-Garcia ruling of the Supreme Court.

While the World Bank welcomed the devolution of functions, it said that a lack of coordination between the national and local government along with weak implementation capacity could delay the transition towards increased decentralization.

“The national government should clearly define re-devolved functions and communicate these clearly to both national government agencies and local government units,” Kevin Cruz, World Bank economist said.

Cruz added that the authorities need to ensure that the development goals of the national government and local governments are well-aligned, and that service delivery gaps are minimized, particularly amid the COVID-19 pandemic.

“This will require the national government and local government units to review the division of labor between national government agencies and local government units in re-devolving functions, while keeping fiscal and absorptive capacity in mind,” he said.

According to Cruz, addressing weaknesses in planning and coordination is a first step towards managing the transition and improving decentralization.

As a result of the Mandanas Ruling, LGUs’ IRA are programmed to increase by 55 percent in the 2022 budget, reaching P1.08 trillion or 4.8 percent of the country’s gross domestic product compared to 3.5 percent of GDP in 2021.