Local Government Units’ Access to the Private Capital Markets

---

The passage of the local Government Code of 1991 has heralded a new era in local government credit financing. The Code has liberalized the credit policy framework by allowing LGUs to borrow from private and government financial institutions without prior approval by the DOF. It has also allowed LGUs to issue their own debt instruments and to enter into build-operate-transfer (BOT) arrangements for local infrastructure projects. Hailed by many as a significant step for LGUs, this development, however, has ushered in new challenges requiring government to provide the guiding policies. This study, therefore, is part of the ongoing attempts to support and strengthen local government finance. Commissioned by the DOF with funding form WB, this study looks carefully at the policy and institutional issues that the government must address for LGUs to have access not only government financial institutions but moor importantly, to the private capital market. It is hoped that his study will further contribute to the public debate and analysis of local government credit in local development. It is indeed timely to have a study which recommends measures to break the barriers LGUs traditionally face to get into the private capital market. Readers, researcher and policymakers will find in this book definite course of action that the government should take to liberalize LGUs’ access to private capital markets.