LGU borrowing down 62% in 2025

Local government units (LGUs) sharply reduced their reliance on credit markets last year, with total financing requests plunging by more than 60 percent as borrowing activity shifted away from the nation’s economic heartland toward provincial infrastructure projects.

- By DERCO ROSAL

According to the Bureau of Local Government Finance (BLGF), the number of LGUs seeking certificates of net debt service ceiling and borrowing capacity (CNDSCBCs)—a regulatory prerequisite for securing loans—fell to 185 in fiscal year 2025, a 48.8 percent decline from the 362 units recorded in 2024.

This contraction in participation led to a 62.2 percent decline in total loan requirements, which ended at P44.7 billion for the year, down from P118.2 billion in the previous period.

LGUs are required to submit CNDSCBCs to government financial institutions (GFIs) and private banks to demonstrate their capacity to repay loans.

Ma. Teresa S. Habitan, vice chancellor of the Philippine Tax Academy, meanwhile, explained that borrowing volumes typically decline during election cycles due to legal restrictions on new projects.