THE number of Monetary Board opinions (MBO) sought by local government units (LGUs) on proposed domestic borrowings picked up further in the second semester of last year, the Bangko Sentral ng Pilipinas (BSP) reported late Friday.

The central bank received 159 requests for MBO on LGUs' proposed domestic borrowings, up 15.2 from 138 requests received in the previous period a year ago.

At P48.9 billion, the total amount was 13.5 percent higher compared with the P43.1 billion received in the first semester of 2023.

Requests for MBOs were received from 123 municipalities amounting to P15.9 billion, 20 cities (P22.6 billion), 11 provinces (P10.3 billion) and five barangay (P109.3 million), primarily in Regions 3 (Central Luzon), 4A (Calabarzon), 5 (Bicol), 6 (Western Visayas), 7 (Central Visayas), and 12 (Soccskargen).

In the recent semester, the MB provided its opinion on LGU borrowings amounting to P45.0 billion, which included 125 requests from the second half of 2023 and 18 from the first half of 2023.

The other 34 requests from that semester are pending due to incomplete information and documentation from the borrowing institutions.

Most loans (61.4 percent) were meant for infrastructure projects like roads, bridges, markets, health care facilities, school buildings, solid waste management recovery facilities, water systems and septage treatment, and drainage and sewerage systems.

Approximately 19.5 percent of the LGU borrowings were used for land purchases, site development, construction of buildings, acquisition of palay (unmilled rice) from small farmers, and installation of various e-governance systems.

Meanwhile, 19.0 percent of the proposed loans were earmarked for purchasing heavy equipment and service vehicles.

The need to issue a prior opinion of the MB on the proposed borrowings of government entities, including LGUs, is mandated by law under Section 123 of Republic Act 7653 or the New Central Bank Act of 1993 as amended by RA 11211.

The said provision requires the government, its political subdivisions or instrumentalities, to request the MB to render its opinion on the monetary and external sector implications of their proposed loans prior to undertaking any credit operation.

This provision of the law stems from the BSP's role as the government's advisor on official credit operations.

"This process enables the BSP to monitor trends in public sector debt and assess their impact on the monetary sector and external payments position of the economy," the central bank said.