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Philippines: Designing a Local Government Enhancement Fund

dc.contributor.authorJorge Martínez-Vazquez
dc.contributor.authorYongzheng Liu
dc.description.abstractThe main transfer instrument from the central government to local government units (LGUs) in the Philippines, the internal revenue allotment, has been criticized for: its inability to equalize sufficiently, especially regarding the poorer municipalities and provinces, and its funds not having been spent efficiently. For some time, LGUs have petitioned the Government of the Philippines to expand the funding of the IRA. However, there appears to be ample consensus that any additional funding needs to be distributed in a manner that addresses the design flaws of the IRA. In this paper, options for the design of a possible new transfer, the Fiscal Equity and Expenditure Performance Fund, separate from the IRA, are outlined. Such design faces four major challenges: (i) how to define the origin and computation of the additional funding, (ii) how to divide the additional funding among the different groups of LGUs (provinces, cities, municipalities, and barangays), (iii) what formula to use for the distribution of the additional funds for qualifying LGUs in each particular group of LGUs, and (iv) how to ensure that LGUs will use the additional funds to improve their service delivery performance. The transfer mechanism suggested as a result offers a bridge toward the eventual review and reform of the IRA.
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.titlePhilippines: Designing a Local Government Enhancement Fund
dc.typeWorking Papers
dc.subject.expertCorporate Governance Reform
dc.subject.expertGovernance Approach
dc.subject.expertGovernance Quality
dc.subject.expertPublic Sector Projects
dc.subject.expertPublic Sector Reform
dc.subject.adbInstitutional Framework
dc.subject.adbPublic Administration
dc.subject.adbBusiness Ethics
dc.subject.adbPolitical Leadership
dc.subject.adbPublic enterprises
dc.subject.adbPublic finance
dc.subject.naturalPolitical obligation
dc.subject.naturalPublic management
dc.subject.naturalGovernment accountability
dc.subject.naturalTransparency in government
dc.subject.naturalPolitical ethics
dc.subject.naturalGovernment spending policy
dc.subject.naturalGovernment services
dc.title.seriesADB Southeast Asia Working Paper Series
dc.title.volumeNo. 7
dc.contributor.imprintAsian Development Bank
oar.themePublic Sector
oar.adminregionSoutheast Asia Region
oar.authorMartínez-Vazquez, Jorge
oar.authorLiu, Yongzheng

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  • ADB Southeast Asia Working Paper Series
    The Asian Development Bank (ADB) Southeast Asia Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed economic, sector, and policy work undertaken by ADB staff, consultants, or resource persons in the context of the operational work of ADB’s Southeast Asia Department. The series deals with economic and development issues in Southeast Asia and aims to enhance knowledge of the region’s development and policy challenges, strengthen subregional and country operations, and contribute to policy dialogue at the national and regional levels. The ADB Southeast Asia Working Paper Series is a quick-disseminating, informal publication whose titles could subsequently be revised for publication as articles in professional journals or as chapters in books. Maintained by the Southeast Asia Department, the purpose of the series is to disseminate the findings of works in progress to encourage the exchange of ideas. The emphasis is on getting findings out quickly even if the presentation of the work is less than fully polished.

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