The Health Sector Reform Agenda Support Programme (HSRASP), implemented jointly by the Department of Finance (DoF) through the Municipal Development Fund Office (MDFO) and Department of Health (DoH), and with funding from the Kreditanstalt fur Weiderafbau (KfW) has a total allocation of Euro 1.17 Million Performance Based Grant (PBG). This will be distributed to twelve (12) LGUs that have availed of financing from the HSRASP.On 18 May 2012, the DOF, through National Treasurer Roberto B. Tan (Treasurer of the Philippines and Chairman MDFO-Policy Governing Board), Director Maylene M. Beltran (Director IV, Bureau of International Health Cooperation-DOH), and Ms. Olga Caday-Asaña (KfW) has entitled five (5) Local Government Units (LGUs) with a Performance Based Grant from the Health Sector Reform Agenda Support Programme (HSRASP) with a total of Euro 115,079.54 Performance Based Grant (PBG). Said LGUs that have been given with PBG entitlement are the following with their corresponding amount of grant: Gamu, Isabela (Euro 12,129.27), Casiguran, Sorsogon (Euro 9,289.79), Solano, Nueva Vizcaya ( Euro 19,685.04), San Mariano, Isabela (Euro 45,844.20), and Luna, Isabela (28,131.24). The 30% of the grant has already been awarded to the LGUs during the signing of the Tripartite Memorandum of Agreement (MOA) as a result of their compliance with Health Indicators of the DoH and Governance Condition requirements set forth in the Performance Based Incentive Policy (PBIP). The remaining 70% of the grant entitled to the LGUs shall be given on the last quarter of the year (2012) after assessing the LGUs performance, based on a set of performance measures indicated in the MOA.

The HSRASP is one of the Official Development Assistance (ODA) projects using the PBIP. The PBIP serves as a framework that would guide performance based initiatives and rationalizes intergovernmental fiscal transfers in the country as approved by Development Budget Coordinating Committee (DBCC) in 20 February 2009. It hopes to leverage efforts of performance based initiatives towards poor LGUs, who have high demands for funds for capital investment, are reform-minded, have minimum capacity to handle discretionary funds and are committed to perform better on governance areas. The national government expects to recoup the financial incentives that would be provided to these LGUs through avoided costs borne out of inefficiency and a more efficient service delivery of LGUs to their constituents.

The Performance Based Grant System (PBGS), which serves as the mechanism to implement the Policy, aims to drive institutional improvement in LGU performance in the areas of planning, budget allocation, public finance management, and human resource development. Unlike other financing modalities which provide for loan and grant sharing, the design of the PBGS was to provide grants to LGUs upon validation that they were able to accomplish desired reform measures.  In the implementation of the HSRASP-PBGS, only two performance areas are being measured, First is the Governance and Financial Accountability and second, the LGU’s health sector performance through the DoH Score Card.The PBGS was developed and is implemented by the Department of Finance through the MDFO. Implementation is made possible through inter-agency collaboration that includes the Department of Interior and Local Government (DILG), National Economic and Development Authority (NEDA), Department of Budget and Management (DBM), Department of Health (DoH), Department of Agriculture (DA), Department of Agrarian Reform (DAR), Department of Environment and Natural Resources (DENR),  League of Municipalities of the Philippines (LMP), League of Cities of the Philippines (LCP), League of Provinces of the Philippines (LPP), and Union of Local Authorities of the Philippines (ULAP). From 2008- 2012 the World Bank (WB) and Asian Development Bank (ADB) helped in developing the implementation of PBGS.

This year, aside from awarding the aforementioned 5 LGU’s with their remaining 70% grant (maximum grant that they can avail based on performance) and the remaining 7 LGUs that will be entitled for HSRASP-PBGS, more grants could be expected by the LGUs through the non-sectoral PBGS which has been allocated P 104 Million by the DBM, whose beneficiary provinces will be announced by DOF-MDFO in the 2nd-3rd quarter of the year.In addition, another sectoral PBGS is anticipated to be implemented this year through the Agrarian Reform Communities Project 2 amounting to PhP 1.12 Billion.

Performance Based Grant System (PBGS) for Local Government Units. National Treasurer and Municipal Development Fund Office-Policy Governing Board (MDFO-PGB) Chairman Roberto B. Tan (7th from the left) led the ceremonial toast to the Performance Based Grant from the Health Sector Reform Agenda Support Programme (HSRASP) last 18 May 2012 in simple ceremonies held at the Department of Finance. Present are (from left): Gamu, Isabela SB Member Dante Martinez; Casiguran, Sorsogon Mayor Ma. Ester Hamor; Solano, Nueva Vizcaya Mayor Philip Dacayo; Casiguran, Sorsogon MHO Dra. Epifania Hallig; Luna Isabela Mayor Manuel Tio; San Mariano, Isabela Mayor Edgar Go; DOH Director Maylene Beltran (BIHC); and KfW Representative Olga Caday-Asaña. More grants could be expected by the LGUs through the non-sectoral PBGS and Agrarian Reform Communities Project 2.