Department of Finance (DOF) Secretary Benjamin Diokno is asking local government units (LGUs) to speed up their spending given their budget surplus because of the lack of investments.
President Ferdinand Marcos Jr. (2nd right) presides over a sectoral meeting in Malacañang on Tuesday, Nov. 28, 2023. (Photo from the Presidential Communications Office)

Speaking during a Palace press briefing on Tuesday, Nov. 28, the official said that LGUs are in a “surplus position” while the national government is in “deficit.”

This, he added, had always been the case because LGUs “are not inclined to invest in some activities” despite being allowed to borrow money from banks.

“So, we requested also the President to encourage local government units to expand its revenue sources and boost spending to support local and national growth,” he explained, adding that government corporations such as the Government Service Insurance System (GSIS) and the Social Security System (SSS) must also boost their spending.

The DOF chief attended the sectoral meeting, which President Marcos presided over in Malacañang discussing the economics prospects for next year.

He lamented that despite being in a surplus position with their budget, “the LGUs continue to be dependent on the national transfer despite its broad powers to raise sources of revenue.”

“Lagi silang nakaasa sa (They are always dependent on the) transfer from the national government and hindi nila ang tawag namin (and they are not, what we call) low absorptive capacity to improve the quality of public goods and services that they are supposed to deliver,” Diokno said.

“So, kumbaga sinasabi natin sa LGUs ‘Bilis-bilisan naman ninyo ang paggastos ng pera’ (So, it’s like we’re telling the LGUs ‘Hasten up your spending’),” he added.

Diokno explained that LGUs have not been traditionally spending as much as the national government despite being in a position to do so.

“That’s always been the problem. Ever since, I can remember, the LGUs are in surplus position whereas the national government is in a deficit position. And noon time namin (During our time), I think one of the reasons is that, the LGUs by nature or LGU officials by nature are kind of shy to invest in some projects,” he said.

Although LGUs are allowed to borrow money from banks, the official stressed that they are not inclined to do so because their term is only for three years.

He furthered that local chief executives would need to spend one year in feasibility study and research before presenting the proposal to a lender.

By the third year, despite the possibility of being granted the loan, local chief executives would be preparing for reelection.

“So, tatakbo naman siya ng reelection wala pa siyang napapakita, pero may utang siya. So, mga baka ganoong isyu (So, he’s going to run for elections but he has nothing to show, he has debt even. So, those are the issues),” he added.

The DOF chief also recognized the problem with “hiring” because LGUs have a hard time attracting personnel.

“So, in response, I think we are going to tap the Development Academy on the Philippines and the Local Government Academy to train people who may actually be instrumental in investing in some local government activities,” he said.