MANILA, Dec. 13 (Xinhua) -- The Asian Development Bank (ADB) approved a 250-million-U.S. dollar loan on Tuesday to help the Philippine local government units (LGU) deliver better and more effective public service.

The policy-based loan is the second phase of a fiscal decentralization reform program being implemented by the Philippine government, said the Manila-based bank in a statement.

"Service delivery, especially in the rural areas, has lagged those of the more developed areas as rural LGUs do not have sufficient revenues," said Stephen Schuster, an ADB principal financial sector specialist.

"Therefore, the government has prioritized a number of initiatives to assist LGUs, including distributing national resources more equitably and increasing their capacity to raise own-source revenues to improve the delivery of health, education, housing and other services to communities," he added.

As a result, LGUs account for some 27 percent of the total government expenditures (2014), excluding debt amortization, according to the ADB.

The reform program has helped LGUs enhance tax collection efficiency, access to debt capital markets, strengthen public financial management systems, and create a more equitable fiscal framework geared toward the achievement of inclusive growth, said the bank.

Moreover, decentralization also improves governance and service delivery, with LGUs becoming more accountable to their constituencies, it added.