DEPARTMENT OF FINANCE

Municipal Development Fund Office

MUNICIPAL DEVELOPMENT FUND OFFICE

LENDING FACILITIES

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.

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

Lending Facility 1:

L O G O F I N D

Local Government Finance and Development Project

• 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

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

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

Component 1:LGU SUBPROJECT FINANCING

Provision of TECHNICAL and FINANCIAL ASSISTANCE to local government units in expanding and upgrading basic infrastructure, services and facilities.

INCOME-GENERATINGPublic Market and SlaughterhouseMunicipal Water SystemMunicipal Pier and WharfBus and Jeepney Transport TerminalPost-Harvest FacilitiesCold Storage and Ice Plant

NON-INCOME-GENERATINGLocal Roads and Bridges

Street Furniture and LightingFlood Control and Drainage

ELIGIBLE SUBPROJECTS

ENVIRONMENTAL

River/Seashore ProtectionOpen Space and ParksSolid Waste ManagementSanitation/Public Toilet and Combined Sewer Traffic Management and Engineering

SOCIALHealth Center

Rehabilitation of HospitalSchool Building

ELIGIBLE SUBPROJECTS

EQUIPMENTHeavy Equipment for Road Construction and Maintenance

CONSULTANCY SERVICESProject Preparation and Feasibility Studies

Detailed Engineering and Construction Supervision

ELIGIBLE SUBPROJECTS

FINANCING TERMS

1. LOAN COMPONENTa. 15 years repayment period inclusive of a 3-year grace period on principal paymentsb. 12% fixed interest rate per annum

2. GRANT COMPONENTa. 10%-70% of the sub project cost depending on the

subproject type and LGU Income Class

3. EQUITY COMPONENTa. Ranges from 10% to 20% of the subproject cost depending

on the subproject type and LGU Income Class

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.

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.

• 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

PREQUALIFICATION REQUIREMENTS

• Letter of Intent

• Sanggunian Resolution

• Project Description/Feasibility study (if available)

• Latest Financial Statements (for computation of Borrowing and Debt Service Capacities)

Lending Facility 2:

P R O – L E N DProgram Lending

P R O – L E N DProgram 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

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

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.

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.

Terms and Conditions

• 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

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).

Thank you.