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

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Presentation on theme: "DEPARTMENT OF FINANCE Municipal Development Fund Office MUNICIPAL DEVELOPMENT FUND OFFICE LENDING FACILITIES."— Presentation transcript:

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 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 L O G O F I N D

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 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 ELIGIBLE SUBPROJECTS

10 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 ELIGIBLE SUBPROJECTS

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

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 Promotes LGU-initiated subprojects Instills LGU ownership Enhances the creditworthiness of LGUs Builds the capacity of LGUs Spawns a holistic approach to local development NOVEL FEATURES OF THE LOGOFIND PROJECT

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 Facilitate implementation of policy reforms at the LGU level in: Fiscal Administration Revenue Collection Resource Generation Budgetary Planning Expenditure Management Overall Governance OBJECTIVES OF THE PRO-LEND

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 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 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. Terms and Conditions

22 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. MAIN FEATURES OF THE PRO-LEND

23 PREQUALIFICATION REQUIREMENTS a.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.


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