Provinces, cities and municipalities may extend loans, grants or subsidies to other LGUs in amounts not exceeding their

surplus funds. LGUs may also jointly or severally contract loans, credits, and other forms of indebtedness for purposes
mutually beneficial to them. LGUs may, through appropriate ordinances, group themselves, consolidate, or coordinate
their efforts, services and resources for purposes commonly beneficial to them. In support of such undertakings, the
LGUs involved may contribute funds, real estate, equipment and other kinds of property and appoint or assign
personnel as may be agreed upon by the concerned LGUs through Memoranda of Agreement. [Per Sections 300 and 33
of the LGC]

Executive Order No. 809, s. 2009

- IMPLEMENTING THE FINANCING POLICY FRAMEWORK FOR LOCAL GOVERNMENT UNITS BY IDENTIFYING
NEW SOURCES OF FUNDING FOR FIRST TIER LOCAL GOVERNMENT UNITS UNDER REPUBLIC ACT NO. 7160

Executive Order No. 127, s. 1987

- REORGANIZING THE MINISTRY OF FINANCE – BLGF to develop and promote plans and programs for the
improvement of resource management systems, collection enforcement mechanisms and credit utilization
schemes at the local levels.

MC No. 24 s.2019 – Code of Corporate Governance for Public Companies and Registered Issuers

Art. 403 LGC IRR - DOF mandated to render technical assistance to any LGU in the availment of credit facilities,
flotation of bonds, contracting of loans and issue guidelines for the purpose.

The LGC also authorized local governments to avail themselves of credit lines from government or private banks and
lending institutions for the purpose of stabilizing local finances.

Among the schemes allowed under the LGC are: (i) loans, credits, and other forms of indebtedness; (ii) deferred
payment and other financial schemes; (iii) bonds and other long-term securities; (iv) inter-local government loans,
grants, and other subsidies; and (v) loans from funds secured by national government from foreign sources. The
decisions of local governments to issue bonds, debentures, notes, and other obligations to finance self-liquidating,
income-producing development or livelihood projects are subject to the regulations of the Bangko Sentral ng Pilipinas
(BSP), the country’s central bank, and the Securities and Exchange Commission. LGUs may also enter into contracts with
the private sector for the financing, construction, operation, and maintenance of any financially viable infrastructure
facilities under the build-operate-transfer (BOT) scheme or any of its variants, authorized by RA No. 695714 as
amended by RA No. 7718.

Borrowings of local governments, however, are limited to the following purposes:

1. Construction, installation, improvement, expansion, operation, or maintenance of public facilities, infrastructure

facilities, housing projects, acquisition of real property, and the implementation of other capital investment projects;

2. Establishment, development, or expansion of agricultural, industrial, commercial, house financing projects, livelihood
projects, and other economic enterprises;

3. Acquisition of property, plant, machinery, equipment, and necessary accessories; and

4. Financing of self-liquidating, income-producing development or livelihood projects.