Report of the Working Group on

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Report of the Working Group on STRENGTHENING
DECENTRALIZATION AND LOCAL GOVERNANCE IN THE
PHILIPPINES
2005 Philippine Development Forum Marco Polo
Hotel, Davao City, Philippines March 7-8, 2005
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AGREED ACTION AGENDA
A. LOCAL GOVERNANCE
Capacity Building
Performance Benchmarking
Local Governance Framework
B. LOCAL FINANCE
Local Revenue Generation
Capital Grants
LGU Access to Capital Market Financing
C. LEGAL FRAMEWORK
Proposed Amendments to the Local Government Code
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AGREED ACTION AGENDA
A. LOCAL GOVERNANCE

• Department of Interior Local Government will
  take the lead to
• Harmonize capacity building interventions,
  including setting up a sustainable mechanism for
  rationalization and value-adding of capacity
  building activities
• Institutionalize performance benchmarking
  systems review the two existing systems
  LGPMS-LGFPMS
• Clarify roles of Local Government Units and
  National Government Agencies in the delivery of
  basic services (e.g. health, social welfare,
  etc.)

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AGREED ACTION AGENDA
B. LOCAL FINANCE
Department of Finance will take the lead to

• Request the Commission on Audit and Central Bank
  (BSP) to accredit selected private banks as LGU
  depository banks
• Harmonize Government Financial Institution
  on-lending terms of funds sourced from Official
  Development Assistance
• Consider well-targeted and performance based
  grants, without creating moral hazard (i.e.
  dependency on grants)
• Adopt a consistent financing framework for
  government credit and grant programs consider
  options for market segmentation and financing
  project preparation assistance to LGUs
• Explore untapped LGU revenue bases
  (e.g.centralized land valuation, privatization of
  assets)

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AGREED ACTION AGENDA
C. LEGAL FRAMEWORK

• Conduct a broad review of the implementation of
  decentralization and propose amendments to the
  1991 Local Government Code, taking account of
  already completed studies and using available
  grant assistance.
• Priority areas for review include

• Two track (national and local) delivery system
  for basic services expenditure assignments

• Supervision and appointment of key local
  government officials by national Government
  Agencies to promote careerism

• Formula for the Internal Revenue Allotment to be
  more equitable incentive-oriented
• Book 2 of the code (local taxation fiscal
  administration)

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• NEXT STEP
• Core group to meet within 6 weeks to develop a
  work program and timetable for activities to be
  undertaken by the working group over the next
  year in the following areas
• Capacity Building
• Performance benchmarking
• Local Government financing framework (grants
  loans)
• Review of implementation and proposed amendments
  to the Local Government Code