DISBURSEMENT SNAGS: Iloilo City Misses SGLG Award Again

By Rjay Zuriaga Castor

For the second consecutive year, Iloilo City has failed to secure the prestigious Seal of Good Local Governance (SGLG) award due to its inability to fully disburse its development funds, according to the Department of the Interior and Local Government (DILG).

DILG-Iloilo City Head Oscar Lim said the city government failed to meet the requirement of disbursing 20 percent of its development fund in 2023, which was the only indicator it did not comply with for the SGLG.

“According to the indicator, by December 31, 2023, 100 percent of the development fund should have been disbursed. This means the funds should have been released to contractors or fully paid for eligible projects,” Lim explained.

As of the end of 2023, Iloilo City had only disbursed 42 percent of its development fund, falling short of the 55 percent average required for highly urbanized cities under the SGLG framework.

REJECTED APPEAL

During the SGLG validation process, the city appealed to the Bureau of Local Government Finance (BLGF) to consider the development fund under an “obligated” status instead of fully disbursed.

The BLGF, which provides indicators for the DILG’s SGLG assessment, denied the appeal.

“If they had accepted the obligated status, we would have passed. But they didn’t, because the requirement is for the funds to be fully disbursed,” Lim said.

 CAUSES OF DELAY

Lim attributed the delay to issues with contractor billing and incomplete documentation.

“Delays often occur because funds are not fully available at the beginning of the year, and contractors may hesitate to claim payments in December if they anticipate needing to bill in January,” he explained.

This results in unclaimed payments despite funds already being obligated for specific projects.

“The problem with the city is that it seems the contractors were not paid. But in the records, the city government is already obligated to pay. The problem is not just within the city government but also with the contractors who should immediately process their billing,” Lim said.

He clarified that the situation does not imply any misappropriation by the city government but reflects procedural delays and contractor-related issues.

DEVELOPMENT FUND REQUIREMENTS

The Local Government Code of 1991 mandates that local government units (LGUs) allocate at least 20 percent of their annual Internal Revenue Allotment for development projects. These funds are meant to support socio-economic and environmental initiatives.

WHY THE SGLG MATTERS

The SGLG award goes beyond recognition for exemplary governance.

It provides access to the SGLG Incentive Fund, which awardees can use to finance development initiatives such as local economic development, disaster risk reduction and management, and ecological solid waste management.

For a city, this translates to a minimum of PHP 2.3 million in additional funding for local projects.

Iloilo City’s failure to secure the SGLG highlights the need for better coordination and efficiency in fund disbursement processes to unlock the benefits of this prestigious recognition.