“I will definitely not sign Certifications for bank loan applications of Local Government Units (LGUs) which are not conferred with the Seal of Good Housekeeping (SGH). So, do not endorse LGUs which are not.”
The Department of the Interior and Local Government (DILG) Regional Director Corazon P. Guray firmly said before the DILG Provincial Directors, Cluster Leaders and regional office personnel during their meeting last August 9 – 10, 2012 at the DILG Regional Office.
The pronouncement of Dir. Guray is in support to the statement of DILG Secretary Jesse M. Robredo, who said that only LGUs that have been conferred with the Seal would be allowed to secure a loan from banks and other financial institutions.
Thestand of the Department came as the Bureau of Local Government Finance (BLGF) issued a circular that listed down SGH as one of the stringent requisites for LGUs applying for authority to borrow money from banks and other financial institutions.
Secretary Robredo in a statement said that the DILG welcomes the BLGF policy because SGH is now being recognized by other national government agencies and other concerned sectors as an effective way to determine whether an LGU has good financial management, is ready to secure loans and pay for them.
The SGH is conferred to LGUs that have no adversereport from the Commission on Audit (COA), and complied with the posting of the required financial documents, as embodied in the Full Disclosure Policy (FDP) of the DILG. SGH awardees are also eligible to receive the Performance Challenge Fund (PCF), an incentive fund, ranging from PhP1million to PhP7million for their local development projects.
During the Secretary’s visit to the Region, the DILG launched the SGH Bronze, Silver and Gold wherein aside from the two (2) previous requirements, additional requisites include compliance with the Government Procurement Act and the Anti-Red Tape Act.
Dir. Guray shared the statements of SILG Robredo saying that with the inclusion of SGH as an additional requirement for borrowing LGUs, “good local governance is fast becoming the norm and is the way to go for local governments.”
Local Finance Circular 1-2012 laid out new documentary requirements, which LGUs need to submit to BLGF before they can be granted Certificates of Borrowing and Debt Service Capacities should they need to borrow money.
The circular, signed by Finance Secretary Cesar V. Purisima, whose Department oversees BLGF, superseded Local Finance Circular 1-2000 issued on January 19, 2000.
Under the new circular, aside from the Seal of Good Housekeeping, the following documents were added to the original requirements: letter-request from the local chief executive; certification from the local legislative body that the proposed project to be financed by the loan is included in the Approved Annual Investment Plan for the current year; authenticated copy of the resolution authorizing the local chief executive to negotiate and contract a loan; proof of compliance with the full disclosure policy of the DILG, among others.
The DILG is currently conducting site validations to all the LGUs of the Region for the 2012 SGH. Conferment of the Seal, according to Dir. Guray, will be in October, in time for the Celebration of the passage of the Local Government Code of 1991.