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RELEASE
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DILG

DEPARTMENT OF THE IN TERIOR AND LOCAL GOVERNMENT (DILG)

DEPARTMENT OF BUDGET AND MANAGEMENT (DBM)

Joint Memorandum Circular (JMC) No. 2017 - 1

Date: February 22, 2017

To : Local Chief Executives, Members of the Local Sanggunians, Members

of the Local Finance Committees, Heads and Directors of the Central
and Regional Offices/Field Offices of the DBM and DILG, and All
Others Concerned

Subject : UPDATED GUIDELINES ON THE APPROPRIATION AND

UTILIZATION OF THE TWENTY PERCENT (20%) OF THE ANNUAL
INTERNAL REVENUE ALLOTMENT (IRA) FOR DEVELOPMENT
PROJECTS

1.0 PURPOSES
1.1 To prescribe the updated guidelines on the appropriation and utilization of
no less than 20% of the IRA for development projects (hereinafter referred
to as 20% Development Fund [DF] for brevity), as provided under the
Local Government Code of 1991 (Republic Act [RA] No. 7160); and

1.2 To enhance transparency and accountability in the local government units'

(LGUs') utilization cf their respective 20% DFs.

2.0 GENERAL POLICIES

2.1 In accordance with Section 287 of RA No. 7160, every LGU shall
appropriate in its annual budget no less than twenty percent (20%) of its
annual IRA for development projects.

2.2 The 20% OF shall be utilized to finance the LGU's priority development
projects, as embodied in its duly approved local development plans and
Annual Investment Program (AlP), which should be directly supportive of
the Philippine Development Plan and Public Investment Program.

2.3 All development projects to be funded under the 20% DF shall contribute
to the attainmeit of desirable socio-economic development and
environmental management outcomes of the LGU, and shall partake the
nature of investment or capital expenditures. /

F

3.0 ALLOWABLE DEVELOPMENT PROJECTS CHARGEABLE AGAINST THE

20% D

3. Social Development

3.1.1 Construction or rehabilitation of health centers, rural health units or

hospitals, including purchase of lot for the purpose;

3.1 .2 Purchase of ambulance and medical equipment;

3.1.3 Construction or rehabilitation of local government-owned potable

water supply system;

3.1 .4 Establishment or rehabilitation of Manpower Development Centers;

3.1 .5 Construction or rehabilitation of evacuation centers, including

purchase of lot for the purpose;

3.1.6 Construction of Special Drug Education Centers, and Drug

Treatment/Rehabilitation Centers, including purchase of lot for the
purpose;

3.1.7 Rehabilitation of historical sites classified as such by the National

Historical Commission of the Philippines;

3.1.8 Purchase and development of land for the relocation of informal

settlers and relocation of victims of calamities;

3.1.9 Construction or rehabilitation of multi-purpose halls, including

purchase of tot for the purpose; and

3.1.10 Installation of street lighting system.

3.2 Economic Development

3.2.1 Construction or rehabilitation of communal irrigation or water

impounding system;

3.2.2 Purchase or lease of post-harvest facilities, such as farm or hand

tractor with trailer, thresher and mechanical driers;

3.2.3 Construction or rehabilitation of local roads or bridges, including

purchase of appropriate engineering equipment, such as dump
trucks, graders and pay loaders;

3.2.4 Capital expenditures related to the implementation of livelihood or

entrepreneurship/local economic development projects;

3.2.5 Development cf alternative power or energy sources, such as, but

not limited to, renewable energy power plants; and

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3.2.6 Amortization of loans used to finance development projects cited in

this JMC, subject to the 20% debt service cap prescribed under
Section 324 (b) of RA No. 7160.

3.3 Environmental Management

3.3.1 Reforestation and urban greening;

3.3.2 Construction or rehabilitation of sanitary landfills and materials

recovery facilities;

3.3.3 Purchase of garbage trucks and other equipment for environmental

management and protection purposes;

3.3.4 Implementation of flood and erosion control projects, such as

rehabilitation and construction of drainage systems, de-silting of
rivers, and de-clogging of canals; and

3.3.5 Other environmental management projects that promote air and

water quality, as well as productivity of the coastal or freshwater
habitat, agricultural land and forest land, such as, but not limited to,
treatment of wastewater for conservation/re-use purposes, and
installation of air pollution control devices.

4.0 EXPENDITURE ITEMS NOT ALLOWED TO BE CHARGED AGAINST THE

20% DF

The following expenditure items shall not be allowed to be charged against the
20% DF or included in the appropriations for allowable development projects:

4.1 Personal Services expenditures, such as salaries, wages, overtime pay

and other personnel benefits;

4.2 Administrative expenses, such as supplies, meetings, communication,

water and electricity, petroleum products, other general services, and the
like;

4.3 Traveling expenses, whether domestic or foreign;

4.4 Registration or participation fees in training, seminars, conferences or

conventions;

4.5 Purchase of administrative office' furniture, fixtures, equipment or

appliances-,and

4.6 Purchase, maintenance or repair of motor vehicles or motor cycles, other

than those specifed in item 3.0 hereof.

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5.0 RESPONSIBILITY OF THE LOCAL CHIEF EXECUTIVE

It is the responsibility of every local chief executive to ensure that the 20% DF is
optimally utilized to help achieve the desirable socio-economic development and
environmental outcomes of the LGU.

The utilization of the 20% DF, whether willfully or through negligence, for any
purpose other than those expressly prescribed by law or public policy shall be
subject to the sanctions provided under RA No. 7160 and other applicable laws.

6.0 SUBMISSION OF THE AlP

All LGUs shall furnish the DILG and the DBM, through their respective Regional
Offices, copies of the approved AIR containing, among others, the projects to be
funded out of the 20% DF.

7.0 MONITORING

The DILG, through its Bureau of Local Government Supervision, shall monitor the
utilization of the 20% OF through its Local Government Performance
Management System, and maintain a database system on the 20% DF.

8.0 REPEALING CLAUSE

All issuances by the DILG or the DBM which are not consistent herewith are
hereby superseded accordingly. Any future issuance(s) of either the DBM or the
DILG in relation to the appropriation and utilization of the 20% DF shall be made
in accordance with this JMC.

9.0 EFFECTIVITY

This JMC shall take effect immediately.

c
ISMAEL D. SUENO BENJAMIN E. DIOKNO
Secretary, DILG Secretary, DBM

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