The Performance Challenge Fund for Local Government Units (PC Fund) • an incentive fund to LGUs in the form of counterpart funding to high-impact capital investment projects in the Annual Investment Program and funded the 20% Development Fund consistent with national priorities • seek to rationalize national government intergovernmental transfers to LGUs, and encourage alignment of local development initiatives with national government development thrust and priorities.
OBJECTIVES • Recognize good governance performance particularly in the adoption of “good housekeeping” governance areas of planning, budgeting, revenue mobilization, financial management and budget execution, procurement, and resource mobilization • Seek improvements in LGU performance by linking incentives/financial grants with performing LGUs based on an established set of requirements and condition • Encourage alignment local development programs with national development goals and priorities • Stimulate LGU and private sector investments in sectors prioritized by the national government
TARGET BENEFICIARIES • LGUs may be targeted based on • Option1: Income class (3rd class below) • Option 2: Alternative indicators of fiscal need (e.g., income/IRA per capita, or poverty incidence) • Option 3: Level of LGUs (provinces, or cities or municipalities) • Option 4: Open to all LGUs which pass the eligibility criteria – Seal of Good Housekeeping • Number of target LGUs may be limited by the volume of grants that are sizeable enough to be attractive to targeted LGUs • P5M grant/each for 100 municipalities, or • P10M grant/each for 50 provinces, or • P10M grant/each for 50 cities, or
GRANT CONDITIONS AND ELIGIBILITY CRITERIA • Eligibility criteria (qualification) • comply with the following criteria as seal of good housekeeping in key governance areas of planning, budgeting, revenue mobilization, financial management and budget execution, procurement, and resource mobilization in order to qualify for the grant • Grant Condition (competition) • qualified LGUs will be selected on the basis of their equity funding from the LGU 20% development fund on investments it would finance using the grant • priority to LGUs with partnership agreement and counterpart support with other LGUs and/or private sector.
Illustration of Multiplier Effect for Provinces as Target Beneficiaries P10M Performance Challenge Fund Municipal counterpart Local Development Project P 10 M Provincial counterpart Municipal counterpart Municipal counterpart
UTILIZATION OF GRANTS • Project-Specific Matching Grant vs. Local Development Fund “top-up” • Will the grants be used to match LGU investments in identified projects or will these be allowed to enhance the overall LDF of the LGU?
ELIGIBLE PROJECTS The grants may support capital investments from a menu of investment projects that support national priorities, particularly PNnoy priority programs on: • Improving Social Services (e.g. school buildings, hospital and health centers, housing and settlements), • Providing Public infrastructure (e.g. local roads and bridges, railways, ports and wharves), • Enhancing Economic Services (e.g. tourism facilities, irrigation systems, post harvest facilities, cold storage facilities, and other economic infrastructures and growth enhancing projects such as market, slaughterhouses, and water supply system) • Adapting to Climate Change and Preparing for Disaster (e.g. flood control, reforestation, solid waste management facilities, evacuation centers, early warning and devices and rescue equipment) • Promoting Good Governance (Anti-Red Tape/ Anti-Corruption Systems)
ELIGIBLE PROJECTS In financing projects, the PC Fund may be used for the following: • as counterpart funds for foreign-assisted projects of the LGUs • as co-financing for joint projects with other LGUs • as counterpart for projects of the LGUs with the private sector in the context of public partnership in establishing more economic activities FC Fund can not be used to finance the following: • Tax payment • Salaries and recurrent cost • Micro credits and loans
FUND MANAGEMENT • DILG with the DBM shall jointly administer the PC Fund subject to policy and implementation guidelines which shall be formulated by the PC Fund Management Board. • PC Fund Management Board shall be headed by the DILG and composed of the DBM, DOF, and League(s) of LGUs. The Fund Management Board shall prescribe the policy guidelines for the effective implementation of the PC Fund including fund utilization and project implementation, and focusing on the following: • Mechanics for the availment of grant and utilization of fund, • Evaluation guidelines for assessing LGU applications for grant • Monitoring & evaluation mechanism to track the progress in the implementation of PC Fund funded projects • Post audit procedures of the program. • Regional Assessment Team shall be compose of DILG, DBM, DOF and COA to assess LGUs on basic good housekeeping • DILG shall as act as the Technical Secretariat of the PC Fund Management Board.
INSTITUTIONAL ARRANGEMENT Fund Management Board ----------------------- (DILG, DBM, DOF, COA and LGU League(s) DILG as Secretariat Regional Assessment Teams (DILG, DBM, DOF, COA) Regional Assessment Teams (DILG, DBM, DOF, COA) Regional Assessment Teams (DILG, DBM, DOF, COA) Regional Assessment Teams (DILG, DBM, DOF, COA)