MANILA, Philippines — The Department of Budget and Management (DBM) has released official guidelines for the utilization of the P11.3-billion Growth Equity Fund (GEF), a financial assistance package aimed at narrowing the developmental gap between wealthy and poor local government units (LGUs).
The fund, officially known as the Local Government Support Fund-Growth Equity Fund (LGSF-GEF), is part of the 2026 national budget and represents a significant increase from previous years. It primarily targets 4th and 5th income class municipalities and barangays with low fiscal capacity.
Allocation Breakdown The DBM has specified how the billions will be distributed across the country:
- Batanes Province: P100 million
- 9 Selected Cities: P75 million each (including Vigan, Cavite City, and El Salvador).
- 274 Municipalities: P30 million each.
- 591 Barangays: P3.9 million each.
Expanded Project Scope Under Local Budget Circular No. 166 dated February 6, 2026, the DBM has expanded the types of projects that LGUs can fund. Previously limited to water supply systems, recipient LGUs can now implement a maximum of two projects from the following list:
- Local roads and bridges.
- School buildings.
- Water supply and sanitation systems.
- Health stations.
- Electrification programs.
- Food security initiatives.
Mandatory Rainwater Collection In an effort to promote environmental sustainability, the DBM has mandated that all approved infrastructure projects must include the installation of a rainwater collection system.
Heightened Scrutiny The release of these guidelines comes amid intense public and legislative scrutiny of infrastructure spending following a massive flood control corruption scandal in 2025. The DBM emphasized that all LGUs must strictly comply with the requirements of the 2026 General Appropriations Act to ensure that funds are used for their intended purpose without irregularities.
The Growth Equity Fund was established to address the “unequal development” that persisted after the devolution of certain national services to local governments. By providing direct financial injections to the poorest jurisdictions, the government aims to ensure that no community is left behind in the country’s broader economic recovery.