RISING TIDE Understanding the Fiscal Capacity of 75 Philippine Local Government Units for Sustainable Coastal Fisheries Financing PREPARED BY SUPPORTED BY RISING TIDE Understanding the Fiscal Capacity of 75 Philippine Local Government Units for Sustainable Coastal Fisheries Financing TABLE OF CONTENTS 02 Preface 03 Executive Summary 04 Chapter 1. Government Revenue 10 Chapter 2. Government Spending 15 Chapter 3. Debt Capacity 18 Chapter 4. Loans and Grants History 19 Chapter 5. Regulatory Fee Structure 20 Chapter 6. Funding for Small-Scale Fisheries 21 Chapter 7. Capacity-Building Opportunities 22 Conclusion 23 References 2 | RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS Preface ore than 1.8 million improve the ecological and social resilience of Filipinos rely on fishing coastal communities. for their livelihood, and To guide more effective interventions, PREFACEDOF- fish and fish products BLGFMore thanand Rare1.8 millionjointly conductedFilipinos rely a studyon fishing to for their livelihood, and fish and fish products comprise almost 12% facilitatecomprise better almost understanding 12% of the average of the currentFilipino diet, a proportion that is significantly higher than of the average Filipino fiscalmeat and capacity chicken. including Unfortunately, borrowing the capacity, fish catch necessary to provide for Filipino families have diet, a proportion that regulatorybeen steadily fee decliningstructure since and abilitythe 1970s to manage and ha s resulted in a vicious cycle of overfishing and is significantly higher than meat and chicken. loansother ofunsustainable 75 coastal LGUs fishing in practices.the Philippines. If left Thisunaddressed, a collapse in fisheries resource is inevitable, posing a serious threat to both the livelihoods of coastal communities and food security MUnfortunately, the fish catch necessary to provide report has been prepared solely for informational of the nation. The huge disparity that exists in terms of the financial resources needed versus for Filipino families have been steadily declining purposes,what is provided with data for the gathered Philippine from fishing 2011-2018 sector has further exacerbated the vulnerability of both since the 1970s and has resulted in a vicious Statementthe natural ecosystemof Receipts and and of Expenditures coastal communities. (SRE) cycle of overfishing and other unsustainable reports, complemented by responses from The Department of Finance- Bureau of Local Government Finance (DOF-BLGF) and Rare have fishing practices. If left unaddressed, a collapse municipalagreed to treasurerswork together to a to survey, help strengthen without any the fishing sector of coastal local government units in fisheries resource is inevitable, posing a independent(LGUs), through verification. activities thatAs such are theconsistent report with their individual and collective mandates. serious threat to both the livelihoods of coastal doesPursuant not toguarantee Executive or Order warrant No. the 127 accuracy,, the DOF -BLGF is mandated to assist in the formulation and communities and food security of the nation. The reliability,implementation adequacy of policies and completeness on local government of the revenue administration and fund management. huge disparity that exists in terms of the financial information.This includes Some the ofdevelopment the information of plans may and programs for the improvement of resource management systems, collection enforcement mechanisms, and credit utilizations schemes of resources needed versus what is provided for the alsoLGUs. be On superseded the other hand, by political Rare is and an economicinternational non–governmental organization specializing in Philippine fishing sector has further exacerbated conditionsthe use of beyond behavior 2018. change to address environmental challenges, that works with local the vulnerability of both the natural ecosystem governmentsDOF-BLGF and and otherRare wouldpartners like to to implementthank programs for marine resource and fisheries and of coastal communities. themanagement LGUs who to have improve participated the ecological in the and data social resilience of coastal communities. The Department of Finance- Bureau of Local gatheringTo guide more process. effective LGU-related interventions, data presentedDOF-BLGF and Rare jointly conducted a study to facilitate Government Finance (DOF-BLGF) and Rare have inbetter this understandingreport are shared of thenot ctourrent pit LGUs fiscal against capacity including borrowing capacity, regulatory fee agreed to work together to help strengthen the eachstructure other and or abilitydiscriminate to manage LGUs loans based of 75 on coastal their LGUs in the Philippines. This report has been fishing sector of coastal local government units performanceprepared solely related for inform to theational financial purposes indicators, with data gathered from 2011-2018 Statement of Receipts and Expenditures (SRE) reports, complemented by responses from municipal (LGUs), through activities that are consistent with considered in the study. The financial and survey treasurers to a survey, without any independent verification. As such the report does not their individual and collective mandates. Pursuant dataguarantee gathered or warrant from the the study accuracy, will instead reliability be ,used adequacy and completeness of the information. to Executive Order No. 127, the DOF-BLGF asSome basis of forthe identifying information opportunities may also be forsuperseded capacity by political and economic conditions beyond is mandated to assist in the formulation and building,2018. fiscal growth and inter-LGU cooperation implementation of policies on local government whichDOF-BLGF are essential and Rare to would breaking like downto thank barriers the LGUs who have participated in the data gathering revenue administration and fund management. thatprocess. impede LGU the-related flow data of financing presented to in thethis fisheriesreport are shared not to pit LGUs against each other This includes the development of plans and sector.or discriminate LGUs based on their performance related to the financial indicators considered in programs for the improvement of resource the study. The financial and survey data gathered from the study will instead be used as basis for management systems, collection enforcement identifying opportunities for capacity building, fiscal growth and inter-LGU cooperation which are essential to breaking down barriers that impede the flow of financing to the fisheries sector. mechanisms, and credit utilizations schemes of LGUs. On the other hand, Rare is an international non–governmental organization specializing in the use of behavior change to address environmental Nino Raymond B. Alvina Rocky Sanchez Tirona challenges, that works with local governments Niño Raymond B. Alvina Rocky Sanchez Tirona Executive Director Vice President and other partners to implement programs for ExecutiveDOF-BLGF Director Vice President Rare, Inc. marine resource and fisheries management to DOF-BLGF Rare, Inc. RISING TIDE: A FINANCIAL ANALYSIS OF 75 LOCAL GOVERNMENT UNITS | 3 Executive Summary his report compares the of these loans funded traditional projects such financial performance of 75 local as government buildings and equipment. A few government units (LGUs) with LGUs expressed disinterest in credit financing coastal and fishing communities and even fewer were familiar with other financing in the Philippines. The report modalities, such as joint venture agreements uses financial indicators compiled and public private partnerships. There is greater Tfrom Statement of Receipts and Expenditures interest in grants, but among those that had (SRE) reports as well as responses from grant financing, these went mostly to traditional municipal treasurers to a survey conducted via projects also. the Department of Finance Bureau of Local Most LGUs have existing ordinances for Government Finance (DOF BLGF). This report coastal and fisheries resource management is part of a feasibility analysis aimed at better (CFRM) but many have yet to update their understanding the capacity of coastal LGUs to comprehensive land use plans and their local raise and manage financing for their fisheries revenue codes to integrate CFRM plans. Most programs. Data collection and analysis was LGUs have done projects for their fisheries conducted by Rare, in cooperation with BLGF. sector, such as livelihood development initiatives Rare is an international conservation NGO that that were funded by the national government. works in the Philippines with fishing villages and They have also engaged local stakeholders and LGUs to build and strengthen community-based cooperated with other LGUs to advance their coastal fisheries management of municipal CFRM plans. There is not enough data, however, waters, and is now developing innovative as regards outcomes and impact of said projects. blended finance structures to expand solutions to Certain LGUs are better able to balance meet the scale of the challenge. their budgets, generate revenue, and manage With fishing and farming as their main source expenses. Some LGUs have also prioritized the of livelihood, all 75 LGUs have the internal fisheries sector more highly than others, and revenue allotment (IRA) from the national this has led to different inputs and activities government as their main revenue source. This being downloaded to their constituents. Several allocation is currently determined by the Local opportunities