The Asian Development Bank has approved a $500-million policy-based loan for the Philippines’ Public Financial Management (PFM) Reform Program.

PFM Reform Program (Subprogram 1) targets to improve national budget frameworks, empower local governments, and establish a PFM system in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

The PFM Reforms Roadmap 2024-2028, launched by the Department of Budget and Management (DBM) in partnership with ADB last October, aims to build an open government founded on the principles of efficiency, transparency, accountability, and good governance.

“The program not only strengthens the efficiency and transparency of public funds, but also promotes private sector roles in public services, as well as climate resilience and preparedness for Filipinos,” ADB Philippines Country Director Pavit Ramachandran said.

To boost the efficiency of public funds, the government will push for digital transformation of PFM systems and create an enabling regulatory framework for public–private partnerships.

The program also promotes fair and effective distribution of public services under the Mandanas ruling, which mandates all national taxes and other fees collected by the national government be included when calculating the revenue share for local government units.

Establishing a PFM system in BARMM, which include local governance, budgeting, and revenue frameworks, also aims to foster peace-building and recognizes the fiscal autonomy of BARMM.

The ADB and the Public Expenditure and Financial Accountability (PEFA) Secretariat and other development partners will be providing the Philippine government guide for its PFM reform program.