DEPARTMENT OF FINANCE

1
DEPARTMENT OF FINANCE Municipal Development Fund
Office
MUNICIPAL DEVELOPMENT FUND OFFICE LENDING
FACILITIES
2
MUNICIPAL DEVELOPMENT FUND OFFICE

• PD 1914 issued on March 29, 1984 created the MDF
  as a Special Revolving Fund
• Capitalized and funded by proceeds of loans,
  assistance and grants from international sources
  and second generation funds
• Available for lending to local government units
• Executive Order No. 41 (November 20, 1998)
  created the MDFO under the DOF.

3
MUNICIPAL DEVELOPMENT FUND OFFICE
M D F O
Fund Conduit of Foreign-Assisted Projects
Implementing Agency of CBRMP and LOGOFIND
Administers the MDF Program Lending Facility
4
Lending Facility 1
L O G O F I N D
Local Government Finance and Development Project
5
L O G O F I N D

• A 60 million World Bank-assisted project of the
  Department of Finance
• Implemented by the Municipal Development Fund
  Office (MDFO)
• Provides long-term financing and technical
  support to Local Government Units nationwide
• Demand-driven

6
OBJECTIVES OF THE LOGOFIND PROJECT

• To assist local government units in expanding and
  upgrading basic infrastructure, services and
  facilities
• To promote local self-reliance and enhance the
  creditworthiness of local government units
• To enhance capabilities at the national level in
  providing technical guidance to local government
  units

7
COMPONENTS OF THE LOGOFIND PROJECT
Component 1 LGU SUBPROJECT FINANCING Component
2 LGU TRAINING AND CAPACITY BUILDING Component
3 LGU RESOURCE MOBILIZATION Component 4 MDFO
STRENGTHENING
8
Component 1 LGU SUBPROJECT FINANCING
Provision of TECHNICAL and FINANCIAL ASSISTANCE
to local government units in expanding and
upgrading basic infrastructure, services and
facilities.
9
ELIGIBLE SUBPROJECTS
INCOME-GENERATING Public Market and
Slaughterhouse Municipal Water System Municipal
Pier and Wharf Bus and Jeepney Transport
Terminal Post-Harvest Facilities Cold Storage and
Ice Plant NON-INCOME-GENERATING Local Roads
and Bridges Street Furniture and Lighting Flood
Control and Drainage
10
ELIGIBLE SUBPROJECTS
ENVIRONMENTAL River/Seashore Protection Open
Space and Parks Solid Waste Management Sanitation/
Public Toilet and Combined Sewer Traffic
Management and Engineering SOCIAL Health
Center Rehabilitation of Hospital School Building
11
ELIGIBLE SUBPROJECTS

• EQUIPMENT
• Heavy Equipment for Road
• Construction and Maintenance
• CONSULTANCY SERVICES
• Project Preparation and Feasibility Studies
• Detailed Engineering and Construction Supervision

12
FINANCING TERMS
1. LOAN COMPONENT a. 15 years repayment period
inclusive of a 3-year grace period on
principal payments b. 12 fixed interest rate
per annum

• 2. GRANT COMPONENT
• a. 10-70 of the sub project cost depending on
  the subproject type and LGU Income Class

• 3. EQUITY COMPONENT
• a. Ranges from 10 to 20 of the subproject
  cost depending on the subproject type and LGU
  Income Class

13
Component 2 LGU TRAINING AND CAPACITY BUILDING
Through the LGU Training and Capacity
Building Component, the LOGOFIND Project aims to
enhance the technical capability of local
government units through the provision of
MANDATORY and DEMAND DRIVEN training modules.
14
Component 3 RESOURCE MOBILIZATION

• Administered by the BUREAU OF LOCAL GOVERNMENT
  FINANCE (BLGF) to improve revenue generation,
  fiscal performance, and financial reporting of
  local government units through
• Identification of taxable base
• Improvement of tax collection efficiency
• Automation of the current manual system and
• Lowering of the collection costs.

15
NOVEL FEATURES OF THE LOGOFIND PROJECT

• Promotes LGU-initiated subprojects
• Instills LGU ownership
• Enhances the creditworthiness of LGUs
• Builds the capacity of LGUs
• Spawns a holistic approach to local development

16
PREQUALIFICATION REQUIREMENTS

• Letter of Intent
• Sanggunian Resolution
• Project Description/Feasibility study (if
  available)
• Latest Financial Statements (for computation of
  Borrowing and Debt Service Capacities)

17
Lending Facility 2
P R O L E N D
Program Lending
18
P R O L E N D
Program Lending

• Approved by the MDFO-Policy Governing Board on 17
  May 2001
• Financed through the Second Generation Funds
• Designed to extend policy based loans to LGUs to
  assist them in achieving policy reforms

19
OBJECTIVES OF THE PRO-LEND

• Facilitate implementation of policy reforms at
  the LGU level in
• Fiscal Administration
• Revenue Collection
• Resource Generation
• Budgetary Planning
• Expenditure Management
• Overall Governance

20
Eligibility Criteria for Borrowers

• Must be a PROVINCIAL GOVERNMENT
• Committed and willing to pursue the policy reform
  in most, if not all, of its municipalities and
  component cities.
• Enough borrowing capacity to cover the amount of
  the proposed program loan.

21
Terms and Conditions
AMOUNT OF PROGRAM LOAN Based on the assessed
need and capacity of the LGU but not to exceed
its net borrowing capacity as defined in Article
419 of RA 7160. INTEREST RATE 9 per annum
fixed for the entire term of the loan. MATURITY
Ten (10) years inclusive of a two year grace
period on principal payments. MODE OF LOAN
RELEASES In tranches according to conditions on
deliverables agreed between the lender and
borrower. MODE OF PAYMENT On equal semi-annual
basis. AVAILMENT PERIOD Within 24 months after
the date of loan effectiveness.
22
MAIN FEATURES OF THE PRO-LEND

• Framework of local policy reform jointly agreed
  between the LGU borrower and the MDFO.
• Loan implementation are administered by the LGU.
• Greater flexibility in the use of funds for
  various activities aimed at achieving the policy
  objective.
• Supports the spirit of local autonomy and the
  objective of creating more financially
  independent LGUs.
• There is very good opportunity for both the NG
  and the LGU to jointly pursue national policy
  objectives.

23
PREQUALIFICATION REQUIREMENTS

• Letter of Development Policy giving a brief
  description, objectives, benefits and impact of
  the proposed policy reform program.
• b. Latest financial statements (for
  computation of Borrowing and Debt Service
  Capacities).

24
Thank you.